Correlation Between Yang Ming and Accton Technology

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

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

Diversification Opportunities for Yang Ming and Accton Technology

0.79

Correlation Coefficient

Yang Ming  Accton Technology

Poor diversification

The 3 months correlation between Yang and Accton is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Yang Ming Marine and Accton Technology Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Accton Technology Corp and Yang 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 Yang Ming Marine are associated (or correlated) with Accton Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Accton Technology Corp has no effect on the direction of Yang Ming i.e., Yang Ming and Accton Technology go up and down completely randomly.

Pair Corralation between Yang Ming and Accton Technology

Assuming the 90 days trading horizon Yang Ming is expected to generate 1.3 times less return on investment than Accton Technology. But when comparing it to its historical volatility, Yang Ming Marine is 1.14 times less risky than Accton Technology. It trades about 0.11 of its potential returns per unit of risk. Accton Technology Corp is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  53,100  in Accton Technology Corp on August 31, 2024 and sell it today you would earn a total of  11,600  from holding Accton Technology Corp or generate 21.85% return on investment over 90 days.

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

Yang Ming Marine  vs.  Accton Technology Corp

Yang Ming Marine

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Yang Ming Marine are ranked lower than 8 (%) 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.

Accton Technology Corp

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Accton Technology Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Accton Technology showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Yang Ming and Accton Technology

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

The idea behind Yang Ming Marine and Accton Technology 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.

Check out your portfolio center.

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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.