Correlation Between U Ming and G Shank

Can any of the company-specific risk be diversified away by investing in both U Ming and G Shank 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 G Shank 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 G Shank Enterprise Co, you can compare the effects of market volatilities on U Ming and G Shank 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 G Shank. Check out your portfolio center. Please also check ongoing floating volatility patterns of U Ming and G Shank.

Diversification Opportunities for U Ming and G Shank

-0.2

Correlation Coefficient

U Ming  G Shank

Good diversification

The 3 months correlation between 2606 and 2476 is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding U Ming Marine Transport and G Shank Enterprise Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on G Shank Enterprise 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 G Shank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of G Shank Enterprise has no effect on the direction of U Ming i.e., U Ming and G Shank go up and down completely randomly.

Pair Corralation between U Ming and G Shank

Assuming the 90 days trading horizon U Ming is expected to generate 2.49 times less return on investment than G Shank. But when comparing it to its historical volatility, U Ming Marine Transport is 1.12 times less risky than G Shank. It trades about 0.04 of its potential returns per unit of risk. G Shank Enterprise Co is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  5,070  in G Shank Enterprise Co on September 26, 2024 and sell it today you would earn a total of  3,380  from holding G Shank Enterprise Co or generate 66.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.67%
Values	Daily Returns

U Ming Marine Transport  vs.  G Shank Enterprise Co

U Ming Marine

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in U Ming Marine Transport are ranked lower than 3 (%) 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.

G Shank Enterprise

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days G Shank Enterprise Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with U Ming and G Shank

The main advantage of trading using opposite U Ming and G Shank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if U Ming position performs unexpectedly, G Shank 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 G Shank will offset losses from the drop in G Shank's long position.

The idea behind U Ming Marine Transport and G Shank Enterprise Co 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.