Correlation Between U Ming and LK Engineering
Can any of the company-specific risk be diversified away by investing in both U Ming and LK Engineering 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 LK Engineering 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 LK Engineering Co, you can compare the effects of market volatilities on U Ming and LK Engineering 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 LK Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of U Ming and LK Engineering.
Diversification Opportunities for U Ming and LK Engineering
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 2606 and 6139 is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding U Ming Marine Transport and LK Engineering Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LK Engineering 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 LK Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LK Engineering has no effect on the direction of U Ming i.e., U Ming and LK Engineering go up and down completely randomly.
Pair Corralation between U Ming and LK Engineering
Assuming the 90 days trading horizon U Ming Marine Transport is expected to generate 1.51 times more return on investment than LK Engineering. However, U Ming is 1.51 times more volatile than LK Engineering Co. It trades about 0.32 of its potential returns per unit of risk. LK Engineering Co is currently generating about 0.18 per unit of risk. If you would invest 5,650 in U Ming Marine Transport on December 4, 2024 and sell it today you would earn a total of 1,490 from holding U Ming Marine Transport or generate 26.37% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 95.24% |
Values | Daily Returns |
U Ming Marine Transport vs. LK Engineering Co
Performance |
Timeline |
U Ming Marine |
LK Engineering |
U Ming and LK Engineering Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with U Ming and LK Engineering
The main advantage of trading using opposite U Ming and LK Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if U Ming position performs unexpectedly, LK Engineering 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 LK Engineering will offset losses from the drop in LK Engineering'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 |
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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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