Correlation Between U Ming and WinMate Communication

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

Diversification Opportunities for U Ming and WinMate Communication

0.53

Correlation Coefficient

U Ming  WinMate Communication

Very weak diversification

The 3 months correlation between 2606 and WinMate is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding U Ming Marine Transport and WinMate Communication INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WinMate Communication INC 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 WinMate Communication. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WinMate Communication INC has no effect on the direction of U Ming i.e., U Ming and WinMate Communication go up and down completely randomly.

Pair Corralation between U Ming and WinMate Communication

Assuming the 90 days trading horizon U Ming Marine Transport is expected to generate 1.17 times more return on investment than WinMate Communication. However, U Ming is 1.17 times more volatile than WinMate Communication INC. It trades about 0.16 of its potential returns per unit of risk. WinMate Communication INC is currently generating about 0.13 per unit of risk. If you would invest  5,850  in U Ming Marine Transport on December 1, 2024 and sell it today you would earn a total of  1,520  from holding U Ming Marine Transport or generate 25.98% return on investment over 90 days.

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

U Ming Marine Transport  vs.  WinMate Communication INC

U Ming Marine

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in U Ming Marine Transport are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, U Ming showed solid returns over the last few months and may actually be approaching a breakup point.

WinMate Communication INC

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in WinMate Communication INC are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, WinMate Communication showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with U Ming and WinMate Communication

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

The idea behind U Ming Marine Transport and WinMate Communication INC 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.