Correlation Between Yang Ming and Xintec

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

Diversification Opportunities for Yang Ming and Xintec

-0.76

Correlation Coefficient

Yang Ming  Xintec

Pay attention - limited upside

The 3 months correlation between Yang and Xintec is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Yang Ming Marine and Xintec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xintec 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 Xintec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xintec has no effect on the direction of Yang Ming i.e., Yang Ming and Xintec go up and down completely randomly.

Pair Corralation between Yang Ming and Xintec

Assuming the 90 days trading horizon Yang Ming Marine is expected to generate 1.35 times more return on investment than Xintec. However, Yang Ming is 1.35 times more volatile than Xintec. It trades about 0.14 of its potential returns per unit of risk. Xintec is currently generating about 0.15 per unit of risk. If you would invest  7,210  in Yang Ming Marine on September 19, 2024 and sell it today you would earn a total of  660.00  from holding Yang Ming Marine or generate 9.15% return on investment over 90 days.

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

Yang Ming Marine  vs.  Xintec

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.

Xintec

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xintec 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 Xintec

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

The idea behind Yang Ming Marine and Xintec 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.

Check out your portfolio center.

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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.