Correlation Between Yang Ming and Strong H

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

Diversification Opportunities for Yang Ming and Strong H

0.59

Correlation Coefficient

Yang Ming  Strong H

Very weak diversification

The 3 months correlation between Yang and Strong is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Yang Ming Marine and Strong H Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strong H 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 Strong H. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strong H Machinery has no effect on the direction of Yang Ming i.e., Yang Ming and Strong H go up and down completely randomly.

Pair Corralation between Yang Ming and Strong H

Assuming the 90 days trading horizon Yang Ming is expected to generate 1.28 times less return on investment than Strong H. In addition to that, Yang Ming is 1.89 times more volatile than Strong H Machinery. It trades about 0.03 of its total potential returns per unit of risk. Strong H Machinery is currently generating about 0.08 per unit of volatility. If you would invest  3,550  in Strong H Machinery on December 27, 2024 and sell it today you would earn a total of  135.00  from holding Strong H Machinery or generate 3.8% return on investment over 90 days.

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

Yang Ming Marine  vs.  Strong H Machinery

Yang Ming Marine

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Yang Ming Marine are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

Strong H Machinery

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Strong H Machinery are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Strong H 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 Strong H

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

The idea behind Yang Ming Marine and Strong H 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.