Correlation Between Shin Zu and Yang Ming

Can any of the company-specific risk be diversified away by investing in both Shin Zu and Yang Ming 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 Shin Zu and Yang Ming into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Shin Zu Shing and Yang Ming Marine, you can compare the effects of market volatilities on Shin Zu and Yang Ming 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 Shin Zu with a short position of Yang Ming. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shin Zu and Yang Ming.

Diversification Opportunities for Shin Zu and Yang Ming

0.13

Correlation Coefficient

Shin Zu  Yang Ming

Average diversification

The 3 months correlation between Shin and Yang is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Shin Zu Shing and Yang Ming Marine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yang Ming Marine and Shin Zu 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 Shin Zu Shing are associated (or correlated) with Yang Ming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yang Ming Marine has no effect on the direction of Shin Zu i.e., Shin Zu and Yang Ming go up and down completely randomly.

Pair Corralation between Shin Zu and Yang Ming

Assuming the 90 days trading horizon Shin Zu Shing is expected to generate 1.17 times more return on investment than Yang Ming. However, Shin Zu is 1.17 times more volatile than Yang Ming Marine. It trades about 0.08 of its potential returns per unit of risk. Yang Ming Marine is currently generating about 0.06 per unit of risk. If you would invest  7,832  in Shin Zu Shing on September 15, 2024 and sell it today you would earn a total of  11,418  from holding Shin Zu Shing or generate 145.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.79%
Values	Daily Returns

Shin Zu Shing  vs.  Yang Ming Marine

Shin Zu Shing

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Shin Zu Shing are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Shin Zu is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Yang Ming Marine

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Yang Ming Marine are ranked lower than 13 (%) 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.

Pair Trading with Shin Zu and Yang Ming

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

The idea behind Shin Zu Shing and Yang Ming Marine 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.