Correlation Between Yang Ming and Highwealth Construction

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

Diversification Opportunities for Yang Ming and Highwealth Construction

-0.49

Correlation Coefficient

Yang Ming  Highwealth Construction

Very good diversification

The 3 months correlation between Yang and Highwealth is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Yang Ming Marine and Highwealth Construction Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highwealth Construction 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 Highwealth Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highwealth Construction has no effect on the direction of Yang Ming i.e., Yang Ming and Highwealth Construction go up and down completely randomly.

Pair Corralation between Yang Ming and Highwealth Construction

Assuming the 90 days trading horizon Yang Ming is expected to generate 1.73 times less return on investment than Highwealth Construction. In addition to that, Yang Ming is 1.35 times more volatile than Highwealth Construction Corp. It trades about 0.19 of its total potential returns per unit of risk. Highwealth Construction Corp is currently generating about 0.44 per unit of volatility. If you would invest  4,085  in Highwealth Construction Corp on September 4, 2024 and sell it today you would earn a total of  695.00  from holding Highwealth Construction Corp or generate 17.01% return on investment over 90 days.

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

Yang Ming Marine  vs.  Highwealth Construction Corp

Yang Ming Marine

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Yang Ming Marine are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Yang Ming showed solid returns over the last few months and may actually be approaching a breakup point.

Highwealth Construction

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind Yang Ming Marine and Highwealth Construction 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.