Correlation Between Shuang Bang and U Ming

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

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

Diversification Opportunities for Shuang Bang and U Ming

-0.27

Correlation Coefficient

Shuang Bang  U Ming

Very good diversification

The 3 months correlation between Shuang and 2606 is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Shuang Bang Industrial and U Ming Marine Transport in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on U Ming Marine and Shuang Bang 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 Shuang Bang Industrial are associated (or correlated) with U Ming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of U Ming Marine has no effect on the direction of Shuang Bang i.e., Shuang Bang and U Ming go up and down completely randomly.

Pair Corralation between Shuang Bang and U Ming

Assuming the 90 days trading horizon Shuang Bang Industrial is expected to under-perform the U Ming. But the stock apears to be less risky and, when comparing its historical volatility, Shuang Bang Industrial is 2.74 times less risky than U Ming. The stock trades about -0.22 of its potential returns per unit of risk. The U Ming Marine Transport is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  5,660  in U Ming Marine Transport on October 26, 2024 and sell it today you would earn a total of  90.00  from holding U Ming Marine Transport or generate 1.59% return on investment over 90 days.

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

Shuang Bang Industrial  vs.  U Ming Marine Transport

Shuang Bang Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shuang Bang Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

U Ming Marine

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in U Ming Marine Transport are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, U Ming 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 Shuang Bang and U Ming

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

The idea behind Shuang Bang Industrial and U Ming Marine Transport 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.