Correlation Between Yang Ming and Hunt Electronic

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

Diversification Opportunities for Yang Ming and Hunt Electronic

0.04

Correlation Coefficient

Yang Ming  Hunt Electronic

Significant diversification

The 3 months correlation between Yang and Hunt is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Yang Ming Marine and Hunt Electronic Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hunt Electronic 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 Hunt Electronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hunt Electronic has no effect on the direction of Yang Ming i.e., Yang Ming and Hunt Electronic go up and down completely randomly.

Pair Corralation between Yang Ming and Hunt Electronic

Assuming the 90 days trading horizon Yang Ming Marine is expected to under-perform the Hunt Electronic. But the stock apears to be less risky and, when comparing its historical volatility, Yang Ming Marine is 1.24 times less risky than Hunt Electronic. The stock trades about -0.06 of its potential returns per unit of risk. The Hunt Electronic Co is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  2,200  in Hunt Electronic Co on December 2, 2024 and sell it today you would earn a total of  25.00  from holding Hunt Electronic Co or generate 1.14% return on investment over 90 days.

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

Yang Ming Marine  vs.  Hunt Electronic Co

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.

Hunt Electronic

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Yang Ming and Hunt Electronic

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

The idea behind Yang Ming Marine and Hunt Electronic 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.

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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.