Correlation Between U Ming and Holiday Entertainment

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

Diversification Opportunities for U Ming and Holiday Entertainment

-0.63

Correlation Coefficient

U Ming  Holiday Entertainment

Excellent diversification

The 3 months correlation between 2606 and Holiday is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding U Ming Marine Transport and Holiday Entertainment Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Holiday Entertainment 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 Holiday Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Holiday Entertainment has no effect on the direction of U Ming i.e., U Ming and Holiday Entertainment go up and down completely randomly.

Pair Corralation between U Ming and Holiday Entertainment

Assuming the 90 days trading horizon U Ming Marine Transport is expected to generate 2.23 times more return on investment than Holiday Entertainment. However, U Ming is 2.23 times more volatile than Holiday Entertainment Co. It trades about 0.15 of its potential returns per unit of risk. Holiday Entertainment Co is currently generating about -0.11 per unit of risk. If you would invest  5,310  in U Ming Marine Transport on September 3, 2024 and sell it today you would earn a total of  650.00  from holding U Ming Marine Transport or generate 12.24% 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.  Holiday Entertainment Co

U Ming Marine

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in U Ming Marine Transport are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, U Ming may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Holiday Entertainment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Holiday Entertainment Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Holiday Entertainment 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 Holiday Entertainment

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

The idea behind U Ming Marine Transport and Holiday Entertainment Co 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.