Correlation Between U Ming and Taiwan Chelic

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

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

Diversification Opportunities for U Ming and Taiwan Chelic

-0.74

Correlation Coefficient

U Ming  Taiwan Chelic

Pay attention - limited upside

The 3 months correlation between 2606 and Taiwan is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding U Ming Marine Transport and Taiwan Chelic Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Chelic Corp and U 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 U Ming Marine Transport are associated (or correlated) with Taiwan Chelic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Chelic Corp has no effect on the direction of U Ming i.e., U Ming and Taiwan Chelic go up and down completely randomly.

Pair Corralation between U Ming and Taiwan Chelic

Assuming the 90 days trading horizon U Ming Marine Transport is expected to generate 0.58 times more return on investment than Taiwan Chelic. However, U Ming Marine Transport is 1.73 times less risky than Taiwan Chelic. It trades about 0.01 of its potential returns per unit of risk. Taiwan Chelic Corp is currently generating about -0.03 per unit of risk. If you would invest  5,280  in U Ming Marine Transport on September 24, 2024 and sell it today you would earn a total of  20.00  from holding U Ming Marine Transport or generate 0.38% return on investment over 90 days.

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

U Ming Marine Transport  vs.  Taiwan Chelic Corp

U Ming Marine

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days U Ming Marine Transport has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Taiwan Chelic Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Taiwan Chelic Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Taiwan Chelic 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 U Ming and Taiwan Chelic

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

The idea behind U Ming Marine Transport and Taiwan Chelic Corp 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.