Correlation Between Yang Ming and Young Fast

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

Diversification Opportunities for Yang Ming and Young Fast

0.35

Correlation Coefficient

Yang Ming  Young Fast

Weak diversification

The 3 months correlation between Yang and Young is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Yang Ming Marine and Young Fast Optoelectronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Young Fast Optoelect 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 Young Fast. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Young Fast Optoelect has no effect on the direction of Yang Ming i.e., Yang Ming and Young Fast go up and down completely randomly.

Pair Corralation between Yang Ming and Young Fast

Assuming the 90 days trading horizon Yang Ming Marine is expected to generate 1.0 times more return on investment than Young Fast. However, Yang Ming Marine is 1.0 times less risky than Young Fast. It trades about 0.01 of its potential returns per unit of risk. Young Fast Optoelectronics is currently generating about -0.05 per unit of risk. If you would invest  7,520  in Yang Ming Marine on December 29, 2024 and sell it today you would earn a total of  0.00  from holding Yang Ming Marine or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.25%
Values	Daily Returns

Yang Ming Marine  vs.  Young Fast Optoelectronics

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.

Young Fast Optoelect

Risk-Adjusted Performance

Very Weak

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

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

The idea behind Yang Ming Marine and Young Fast Optoelectronics 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.