Correlation Between U Ming and Sporton International

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

Diversification Opportunities for U Ming and Sporton International

-0.42

Correlation Coefficient

U Ming  Sporton International

Very good diversification

The 3 months correlation between 2606 and Sporton is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding U Ming Marine Transport and Sporton International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sporton International 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 Sporton International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sporton International has no effect on the direction of U Ming i.e., U Ming and Sporton International go up and down completely randomly.

Pair Corralation between U Ming and Sporton International

Assuming the 90 days trading horizon U Ming Marine Transport is expected to generate 2.16 times more return on investment than Sporton International. However, U Ming is 2.16 times more volatile than Sporton International. It trades about 0.21 of its potential returns per unit of risk. Sporton International is currently generating about -0.06 per unit of risk. If you would invest  5,380  in U Ming Marine Transport on October 20, 2024 and sell it today you would earn a total of  540.00  from holding U Ming Marine Transport or generate 10.04% 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.  Sporton International

U Ming Marine

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in U Ming Marine Transport are ranked lower than 5 (%) 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 February 2025.

Sporton International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sporton International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with U Ming and Sporton International

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

The idea behind U Ming Marine Transport and Sporton International 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.