Correlation Between Ta Ya and Feng Ching
Can any of the company-specific risk be diversified away by investing in both Ta Ya and Feng Ching 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 Ta Ya and Feng Ching into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ta Ya Electric and Feng Ching Metal, you can compare the effects of market volatilities on Ta Ya and Feng Ching 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 Ta Ya with a short position of Feng Ching. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ta Ya and Feng Ching.
Diversification Opportunities for Ta Ya and Feng Ching
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 1609 and Feng is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Ta Ya Electric and Feng Ching Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Feng Ching Metal and Ta Ya 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 Ta Ya Electric are associated (or correlated) with Feng Ching. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Feng Ching Metal has no effect on the direction of Ta Ya i.e., Ta Ya and Feng Ching go up and down completely randomly.
Pair Corralation between Ta Ya and Feng Ching
Assuming the 90 days trading horizon Ta Ya is expected to generate 1.26 times less return on investment than Feng Ching. But when comparing it to its historical volatility, Ta Ya Electric is 1.18 times less risky than Feng Ching. It trades about 0.04 of its potential returns per unit of risk. Feng Ching Metal is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,510 in Feng Ching Metal on November 3, 2024 and sell it today you would earn a total of 295.00 from holding Feng Ching Metal or generate 19.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ta Ya Electric vs. Feng Ching Metal
Performance |
| Timeline |
| Ta Ya Electric |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Feng Ching Metal |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Ta Ya and Feng Ching Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ta Ya and Feng Ching
The main advantage of trading using opposite Ta Ya and Feng Ching positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ta Ya position performs unexpectedly, Feng Ching 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 Ching will offset losses from the drop in Feng Ching's long position.The idea behind Ta Ya Electric and Feng Ching Metal 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
Other Complementary Tools
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital |