Correlation Between U Ming and Rechi Precision

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

Diversification Opportunities for U Ming and Rechi Precision

0.24

Correlation Coefficient

U Ming  Rechi Precision

Modest diversification

The 3 months correlation between 2606 and Rechi is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding U Ming Marine Transport and Rechi Precision Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rechi Precision 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 Rechi Precision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rechi Precision has no effect on the direction of U Ming i.e., U Ming and Rechi Precision go up and down completely randomly.

Pair Corralation between U Ming and Rechi Precision

Assuming the 90 days trading horizon U Ming Marine Transport is expected to under-perform the Rechi Precision. But the stock apears to be less risky and, when comparing its historical volatility, U Ming Marine Transport is 1.01 times less risky than Rechi Precision. The stock trades about -0.22 of its potential returns per unit of risk. The Rechi Precision Co is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  2,600  in Rechi Precision Co on September 15, 2024 and sell it today you would lose (5.00) from holding Rechi Precision Co or give up 0.19% of portfolio value 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.  Rechi Precision Co

U Ming Marine

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in U Ming Marine Transport are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, U Ming may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Rechi Precision

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Rechi Precision Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Rechi Precision 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 Rechi Precision

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

The idea behind U Ming Marine Transport and Rechi Precision 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.