Correlation Between Lee Chi and Feng Tay
Can any of the company-specific risk be diversified away by investing in both Lee Chi and Feng Tay 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 Lee Chi and Feng Tay into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lee Chi Enterprises and Feng Tay Enterprises, you can compare the effects of market volatilities on Lee Chi and Feng Tay 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 Lee Chi with a short position of Feng Tay. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lee Chi and Feng Tay.
Diversification Opportunities for Lee Chi and Feng Tay
Very poor diversification
The 3 months correlation between Lee and Feng is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Lee Chi Enterprises and Feng Tay Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Feng Tay Enterprises and Lee Chi 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 Lee Chi Enterprises are associated (or correlated) with Feng Tay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Feng Tay Enterprises has no effect on the direction of Lee Chi i.e., Lee Chi and Feng Tay go up and down completely randomly.
Pair Corralation between Lee Chi and Feng Tay
Assuming the 90 days trading horizon Lee Chi Enterprises is expected to generate 0.8 times more return on investment than Feng Tay. However, Lee Chi Enterprises is 1.26 times less risky than Feng Tay. It trades about -0.03 of its potential returns per unit of risk. Feng Tay Enterprises is currently generating about -0.04 per unit of risk. If you would invest 1,690 in Lee Chi Enterprises on September 12, 2024 and sell it today you would lose (300.00) from holding Lee Chi Enterprises or give up 17.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.71% |
| Values | Daily Returns |
Lee Chi Enterprises vs. Feng Tay Enterprises
Performance |
| Timeline |
| Lee Chi Enterprises |
| Feng Tay Enterprises |
Lee Chi and Feng Tay Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lee Chi and Feng Tay
The main advantage of trading using opposite Lee Chi and Feng Tay positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lee Chi position performs unexpectedly, Feng Tay 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 Feng Tay will offset losses from the drop in Feng Tay's long position.| Lee Chi vs. Feng Tay Enterprises | Lee Chi vs. Ruentex Development Co | Lee Chi vs. WiseChip Semiconductor | Lee Chi vs. Novatek Microelectronics Corp |
| Feng Tay vs. Pou Chen Corp | Feng Tay vs. Eclat Textile Co | Feng Tay vs. Hotai Motor Co | Feng Tay vs. Giant Manufacturing Co |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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