Correlation Between Yang Ming and Avision

Can any of the company-specific risk be diversified away by investing in both Yang Ming and Avision 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 Yang Ming and Avision into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Yang Ming Marine and Avision, you can compare the effects of market volatilities on Yang Ming and Avision 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 Yang Ming with a short position of Avision. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yang Ming and Avision.

Diversification Opportunities for Yang Ming and Avision

-0.39

Correlation Coefficient

Yang Ming  Avision

Very good diversification

The 3 months correlation between Yang and Avision is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Yang Ming Marine and Avision in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avision and Yang 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 Yang Ming Marine are associated (or correlated) with Avision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avision has no effect on the direction of Yang Ming i.e., Yang Ming and Avision go up and down completely randomly.

Pair Corralation between Yang Ming and Avision

Assuming the 90 days trading horizon Yang Ming Marine is expected to generate 0.69 times more return on investment than Avision. However, Yang Ming Marine is 1.44 times less risky than Avision. It trades about 0.01 of its potential returns per unit of risk. Avision is currently generating about -0.04 per unit of risk. If you would invest  7,520  in Yang Ming Marine on December 30, 2024 and sell it today you would earn a total of  0.00  from holding Yang Ming Marine or generate 0.0% return on investment over 90 days.

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

Yang Ming Marine  vs.  Avision

Yang Ming Marine

Risk-Adjusted Performance

Very Weak

Over the last 90 days Yang Ming Marine has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Yang Ming is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Avision

Risk-Adjusted Performance

Very Weak

Over the last 90 days Avision 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 Yang Ming and Avision

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

The idea behind Yang Ming Marine and Avision 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..