Correlation Between Yang Ming and Eastern Media

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

Diversification Opportunities for Yang Ming and Eastern Media

0.67

Correlation Coefficient

Yang Ming  Eastern Media

Poor diversification

The 3 months correlation between Yang and Eastern is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Yang Ming Marine and Eastern Media International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastern Media Intern 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 Eastern Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastern Media Intern has no effect on the direction of Yang Ming i.e., Yang Ming and Eastern Media go up and down completely randomly.

Pair Corralation between Yang Ming and Eastern Media

Assuming the 90 days trading horizon Yang Ming Marine is expected to generate 2.61 times more return on investment than Eastern Media. However, Yang Ming is 2.61 times more volatile than Eastern Media International. It trades about 0.31 of its potential returns per unit of risk. Eastern Media International is currently generating about -0.19 per unit of risk. If you would invest  4,440  in Yang Ming Marine on January 29, 2024 and sell it today you would earn a total of  740.00  from holding Yang Ming Marine or generate 16.67% 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.  Eastern Media International

Yang Ming Marine

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Yang Ming Marine are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Yang Ming may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Eastern Media Intern

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eastern Media International 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 Eastern Media

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

The idea behind Yang Ming Marine and Eastern Media International 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.