Correlation Between U Ming and Sports Gear

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

Diversification Opportunities for U Ming and Sports Gear

0.46

Correlation Coefficient

U Ming  Sports Gear

Very weak diversification

The 3 months correlation between 2606 and Sports is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding U Ming Marine Transport and Sports Gear Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sports Gear 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 Sports Gear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sports Gear has no effect on the direction of U Ming i.e., U Ming and Sports Gear go up and down completely randomly.

Pair Corralation between U Ming and Sports Gear

Assuming the 90 days trading horizon U Ming Marine Transport is expected to generate 0.97 times more return on investment than Sports Gear. However, U Ming Marine Transport is 1.03 times less risky than Sports Gear. It trades about 0.09 of its potential returns per unit of risk. Sports Gear Co is currently generating about 0.04 per unit of risk. If you would invest  5,890  in U Ming Marine Transport on December 30, 2024 and sell it today you would earn a total of  850.00  from holding U Ming Marine Transport or generate 14.43% return on investment over 90 days.

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

U Ming Marine Transport  vs.  Sports Gear Co

U Ming Marine

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in U Ming Marine Transport are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, U Ming showed solid returns over the last few months and may actually be approaching a breakup point.

Sports Gear

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sports Gear Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Sports Gear may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with U Ming and Sports Gear

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

The idea behind U Ming Marine Transport and Sports Gear 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.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.