Correlation Between Yang Ming and GeoVision

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

Diversification Opportunities for Yang Ming and GeoVision

-0.55

Correlation Coefficient

Yang Ming  GeoVision

Excellent diversification

The 3 months correlation between Yang and GeoVision is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Yang Ming Marine and GeoVision in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GeoVision 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 GeoVision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GeoVision has no effect on the direction of Yang Ming i.e., Yang Ming and GeoVision go up and down completely randomly.

Pair Corralation between Yang Ming and GeoVision

Assuming the 90 days trading horizon Yang Ming Marine is expected to generate 1.16 times more return on investment than GeoVision. However, Yang Ming is 1.16 times more volatile than GeoVision. It trades about 0.13 of its potential returns per unit of risk. GeoVision is currently generating about -0.06 per unit of risk. If you would invest  6,450  in Yang Ming Marine on September 21, 2024 and sell it today you would earn a total of  1,520  from holding Yang Ming Marine or generate 23.57% return on investment over 90 days.

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

Yang Ming Marine  vs.  GeoVision

Yang Ming Marine

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Yang Ming Marine are ranked lower than 10 (%) 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.

GeoVision

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GeoVision 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.

Pair Trading with Yang Ming and GeoVision

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

The idea behind Yang Ming Marine and GeoVision 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.