Correlation Between Feng Hsin and Froch Enterprise
Can any of the company-specific risk be diversified away by investing in both Feng Hsin and Froch Enterprise 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 Feng Hsin and Froch Enterprise into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Feng Hsin Steel and Froch Enterprise Co, you can compare the effects of market volatilities on Feng Hsin and Froch Enterprise 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 Feng Hsin with a short position of Froch Enterprise. Check out your portfolio center. Please also check ongoing floating volatility patterns of Feng Hsin and Froch Enterprise.
Diversification Opportunities for Feng Hsin and Froch Enterprise
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Feng and Froch is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Feng Hsin Steel and Froch Enterprise Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Froch Enterprise and Feng Hsin 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 Feng Hsin Steel are associated (or correlated) with Froch Enterprise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Froch Enterprise has no effect on the direction of Feng Hsin i.e., Feng Hsin and Froch Enterprise go up and down completely randomly.
Pair Corralation between Feng Hsin and Froch Enterprise
Assuming the 90 days trading horizon Feng Hsin Steel is expected to under-perform the Froch Enterprise. But the stock apears to be less risky and, when comparing its historical volatility, Feng Hsin Steel is 1.21 times less risky than Froch Enterprise. The stock trades about -0.08 of its potential returns per unit of risk. The Froch Enterprise Co is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,765 in Froch Enterprise Co on November 28, 2024 and sell it today you would earn a total of 135.00 from holding Froch Enterprise Co or generate 7.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Feng Hsin Steel vs. Froch Enterprise Co
Performance |
| Timeline |
| Feng Hsin Steel |
| Froch Enterprise |
Feng Hsin and Froch Enterprise Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Feng Hsin and Froch Enterprise
The main advantage of trading using opposite Feng Hsin and Froch Enterprise positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Feng Hsin position performs unexpectedly, Froch Enterprise 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 Froch Enterprise will offset losses from the drop in Froch Enterprise's long position.| Feng Hsin vs. Tung Ho Steel | Feng Hsin vs. U Ming Marine Transport | Feng Hsin vs. TSRC Corp | Feng Hsin vs. Cheng Shin Rubber |
| Froch Enterprise vs. Ta Chen Stainless | Froch Enterprise vs. Chung Hung Steel | Froch Enterprise vs. YC Inox Co | Froch Enterprise vs. Sheng Yu Steel |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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