Correlation Between Yang Ming and Integrated Service

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

Diversification Opportunities for Yang Ming and Integrated Service

0.6

Correlation Coefficient

Yang Ming  Integrated Service

Poor diversification

The 3 months correlation between Yang and Integrated is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Yang Ming Marine and Integrated Service Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Integrated Service 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 Integrated Service. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Integrated Service has no effect on the direction of Yang Ming i.e., Yang Ming and Integrated Service go up and down completely randomly.

Pair Corralation between Yang Ming and Integrated Service

Assuming the 90 days trading horizon Yang Ming Marine is expected to under-perform the Integrated Service. But the stock apears to be less risky and, when comparing its historical volatility, Yang Ming Marine is 1.11 times less risky than Integrated Service. The stock trades about -0.06 of its potential returns per unit of risk. The Integrated Service Technology is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  13,250  in Integrated Service Technology on December 2, 2024 and sell it today you would lose (50.00) from holding Integrated Service Technology or give up 0.38% of portfolio value over 90 days.

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

Yang Ming Marine  vs.  Integrated Service Technology

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 current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Integrated Service

Risk-Adjusted Performance

Very Weak

Over the last 90 days Integrated Service Technology 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 Integrated Service

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

The idea behind Yang Ming Marine and Integrated Service Technology 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.