Correlation Between U Ming and C Sun

Can any of the company-specific risk be diversified away by investing in both U Ming and C Sun at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining U Ming and C Sun into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between U Ming Marine Transport and C Sun Manufacturing, you can compare the effects of market volatilities on U Ming and C Sun and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in U Ming with a short position of C Sun. Check out your portfolio center. Please also check ongoing floating volatility patterns of U Ming and C Sun.

Diversification Opportunities for U Ming and C Sun

-0.36

Correlation Coefficient

U Ming  C Sun

Very good diversification

The 3 months correlation between 2606 and 2467 is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding U Ming Marine Transport and C Sun Manufacturing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on C Sun Manufacturing and U Ming is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on U Ming Marine Transport are associated (or correlated) with C Sun. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of C Sun Manufacturing has no effect on the direction of U Ming i.e., U Ming and C Sun go up and down completely randomly.

Pair Corralation between U Ming and C Sun

Assuming the 90 days trading horizon U Ming is expected to generate 3.77 times less return on investment than C Sun. But when comparing it to its historical volatility, U Ming Marine Transport is 2.08 times less risky than C Sun. It trades about 0.06 of its potential returns per unit of risk. C Sun Manufacturing is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  9,030  in C Sun Manufacturing on October 2, 2024 and sell it today you would earn a total of  11,470  from holding C Sun Manufacturing or generate 127.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

U Ming Marine Transport  vs.  C Sun Manufacturing

U Ming Marine

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in U Ming Marine Transport are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, U Ming is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

C Sun Manufacturing

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days C Sun Manufacturing has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, C Sun is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with U Ming and C Sun

The main advantage of trading using opposite U Ming and C Sun positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if U Ming position performs unexpectedly, C Sun can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in C Sun will offset losses from the drop in C Sun's long position.

The idea behind U Ming Marine Transport and C Sun Manufacturing pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.