Correlation Between Yang Ming and Shieh Yih

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

Diversification Opportunities for Yang Ming and Shieh Yih

-0.5

Correlation Coefficient

Yang Ming  Shieh Yih

Very good diversification

The 3 months correlation between Yang and Shieh is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Yang Ming Marine and Shieh Yih Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shieh Yih Machinery 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 Shieh Yih. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shieh Yih Machinery has no effect on the direction of Yang Ming i.e., Yang Ming and Shieh Yih go up and down completely randomly.

Pair Corralation between Yang Ming and Shieh Yih

Assuming the 90 days trading horizon Yang Ming Marine is expected to generate 0.89 times more return on investment than Shieh Yih. However, Yang Ming Marine is 1.12 times less risky than Shieh Yih. It trades about 0.02 of its potential returns per unit of risk. Shieh Yih Machinery is currently generating about -0.03 per unit of risk. If you would invest  7,460  in Yang Ming Marine on September 26, 2024 and sell it today you would earn a total of  280.00  from holding Yang Ming Marine or generate 3.75% return on investment over 90 days.

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

Yang Ming Marine  vs.  Shieh Yih Machinery

Yang Ming Marine

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Yang Ming Marine are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Yang Ming may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Shieh Yih Machinery

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind Yang Ming Marine and Shieh Yih Machinery 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.