Correlation Between U Ming and Lumax International

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

Diversification Opportunities for U Ming and Lumax International

-0.51

Correlation Coefficient

U Ming  Lumax International

Excellent diversification

The 3 months correlation between 2606 and Lumax is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding U Ming Marine Transport and Lumax International Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lumax International Corp 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 Lumax International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lumax International Corp has no effect on the direction of U Ming i.e., U Ming and Lumax International go up and down completely randomly.

Pair Corralation between U Ming and Lumax International

Assuming the 90 days trading horizon U Ming is expected to generate 1.29 times less return on investment than Lumax International. But when comparing it to its historical volatility, U Ming Marine Transport is 1.06 times less risky than Lumax International. It trades about 0.04 of its potential returns per unit of risk. Lumax International Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  9,110  in Lumax International Corp on October 7, 2024 and sell it today you would earn a total of  1,990  from holding Lumax International Corp or generate 21.84% 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.  Lumax International Corp

U Ming Marine

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in U Ming Marine Transport are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, U Ming is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Lumax International Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lumax International Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Lumax International 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 Lumax International

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

The idea behind U Ming Marine Transport and Lumax International Corp 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.