Correlation Between Yang Ming and Sincere Navigation

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

Diversification Opportunities for Yang Ming and Sincere Navigation

-0.16

Correlation Coefficient

Yang Ming  Sincere Navigation

Good diversification

The 3 months correlation between Yang and Sincere is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Yang Ming Marine and Sincere Navigation Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sincere Navigation Corp 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 Sincere Navigation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sincere Navigation Corp has no effect on the direction of Yang Ming i.e., Yang Ming and Sincere Navigation go up and down completely randomly.

Pair Corralation between Yang Ming and Sincere Navigation

Assuming the 90 days trading horizon Yang Ming Marine is expected to generate 1.17 times more return on investment than Sincere Navigation. However, Yang Ming is 1.17 times more volatile than Sincere Navigation Corp. It trades about 0.03 of its potential returns per unit of risk. Sincere Navigation Corp is currently generating about -0.06 per unit of risk. If you would invest  7,420  in Yang Ming Marine on September 22, 2024 and sell it today you would earn a total of  550.00  from holding Yang Ming Marine or generate 7.41% 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.  Sincere Navigation Corp

Yang Ming Marine

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Yang Ming Marine are ranked lower than 10 (%) 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.

Sincere Navigation Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind Yang Ming Marine and Sincere Navigation 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.