Correlation Between Rafael Microelectronics and U Ming

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

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

Diversification Opportunities for Rafael Microelectronics and U Ming

-0.37

Correlation Coefficient

Rafael Microelectronics  U Ming

Very good diversification

The 3 months correlation between Rafael and 2606 is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Rafael Microelectronics 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 Rafael Microelectronics 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 Rafael Microelectronics 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 Rafael Microelectronics i.e., Rafael Microelectronics and U Ming go up and down completely randomly.

Pair Corralation between Rafael Microelectronics and U Ming

Assuming the 90 days trading horizon Rafael Microelectronics is expected to under-perform the U Ming. But the stock apears to be less risky and, when comparing its historical volatility, Rafael Microelectronics is 1.02 times less risky than U Ming. The stock trades about -0.09 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  5,910  in U Ming Marine Transport on October 4, 2024 and sell it today you would lose (100.00) from holding U Ming Marine Transport or give up 1.69% of portfolio value over 90 days.

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

Rafael Microelectronics  vs.  U Ming Marine Transport

Rafael Microelectronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rafael Microelectronics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains 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 Rafael Microelectronics and U Ming

The main advantage of trading using opposite Rafael Microelectronics and U Ming positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rafael Microelectronics 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 Rafael Microelectronics 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.