Correlation Between U Ming and FSP Technology
Can any of the company-specific risk be diversified away by investing in both U Ming and FSP Technology 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 FSP Technology 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 FSP Technology, you can compare the effects of market volatilities on U Ming and FSP Technology 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 FSP Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of U Ming and FSP Technology.
Diversification Opportunities for U Ming and FSP Technology
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between 2606 and FSP is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding U Ming Marine Transport and FSP Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FSP Technology 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 FSP Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FSP Technology has no effect on the direction of U Ming i.e., U Ming and FSP Technology go up and down completely randomly.
Pair Corralation between U Ming and FSP Technology
Assuming the 90 days trading horizon U Ming Marine Transport is expected to generate 1.56 times more return on investment than FSP Technology. However, U Ming is 1.56 times more volatile than FSP Technology. It trades about 0.11 of its potential returns per unit of risk. FSP Technology is currently generating about 0.0 per unit of risk. If you would invest 5,890 in U Ming Marine Transport on December 28, 2024 and sell it today you would earn a total of 1,010 from holding U Ming Marine Transport or generate 17.15% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
U Ming Marine Transport vs. FSP Technology
Performance |
Timeline |
U Ming Marine |
FSP Technology |
U Ming and FSP Technology Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with U Ming and FSP Technology
The main advantage of trading using opposite U Ming and FSP Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if U Ming position performs unexpectedly, FSP Technology 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 FSP Technology will offset losses from the drop in FSP Technology's long position.U Ming vs. Sincere Navigation Corp | U Ming vs. Wan Hai Lines | U Ming vs. Yang Ming Marine | U Ming vs. Formosa Chemicals Fibre |
FSP Technology vs. Wah Lee Industrial | FSP Technology vs. Sinbon Electronics Co | FSP Technology vs. Acbel Polytech | FSP Technology vs. TXC Corp |
Check out your portfolio center.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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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