Correlation Between U Ming and Acbel Polytech

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

Diversification Opportunities for U Ming and Acbel Polytech

-0.02

Correlation Coefficient

U Ming  Acbel Polytech

Good diversification

The 3 months correlation between 2606 and Acbel is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding U Ming Marine Transport and Acbel Polytech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acbel Polytech 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 Acbel Polytech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acbel Polytech has no effect on the direction of U Ming i.e., U Ming and Acbel Polytech go up and down completely randomly.

Pair Corralation between U Ming and Acbel Polytech

Assuming the 90 days trading horizon U Ming Marine Transport is expected to under-perform the Acbel Polytech. But the stock apears to be less risky and, when comparing its historical volatility, U Ming Marine Transport is 1.89 times less risky than Acbel Polytech. The stock trades about -0.23 of its potential returns per unit of risk. The Acbel Polytech is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  3,095  in Acbel Polytech on September 18, 2024 and sell it today you would lose (85.00) from holding Acbel Polytech or give up 2.75% of portfolio value over 90 days.

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

U Ming Marine Transport  vs.  Acbel Polytech

U Ming Marine

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in U Ming Marine Transport are ranked lower than 9 (%) 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.

Acbel Polytech

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind U Ming Marine Transport and Acbel Polytech 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.