Correlation Between U Ming and KS Terminals

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

Diversification Opportunities for U Ming and KS Terminals

-0.46

Correlation Coefficient

U Ming  KS Terminals

Very good diversification

The 3 months correlation between 2606 and 3003 is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding U Ming Marine Transport and KS Terminals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KS Terminals 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 KS Terminals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KS Terminals has no effect on the direction of U Ming i.e., U Ming and KS Terminals go up and down completely randomly.

Pair Corralation between U Ming and KS Terminals

Assuming the 90 days trading horizon U Ming Marine Transport is expected to generate 0.55 times more return on investment than KS Terminals. However, U Ming Marine Transport is 1.81 times less risky than KS Terminals. It trades about 0.01 of its potential returns per unit of risk. KS Terminals is currently generating about -0.12 per unit of risk. If you would invest  5,380  in U Ming Marine Transport on September 25, 2024 and sell it today you would earn a total of  0.00  from holding U Ming Marine Transport or generate 0.0% return on investment over 90 days.

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

U Ming Marine Transport  vs.  KS Terminals

U Ming Marine

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days U Ming Marine Transport has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

KS Terminals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KS Terminals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with U Ming and KS Terminals

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

The idea behind U Ming Marine Transport and KS Terminals 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.