Correlation Between Feng Hsin and Double Bond
Can any of the company-specific risk be diversified away by investing in both Feng Hsin and Double Bond 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 Double Bond 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 Double Bond Chemical, you can compare the effects of market volatilities on Feng Hsin and Double Bond 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 Double Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Feng Hsin and Double Bond.
Diversification Opportunities for Feng Hsin and Double Bond
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Feng and Double is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Feng Hsin Steel and Double Bond Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Double Bond Chemical 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 Double Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Double Bond Chemical has no effect on the direction of Feng Hsin i.e., Feng Hsin and Double Bond go up and down completely randomly.
Pair Corralation between Feng Hsin and Double Bond
Assuming the 90 days trading horizon Feng Hsin Steel is expected to under-perform the Double Bond. In addition to that, Feng Hsin is 1.12 times more volatile than Double Bond Chemical. It trades about -0.26 of its total potential returns per unit of risk. Double Bond Chemical is currently generating about -0.26 per unit of volatility. If you would invest 4,650 in Double Bond Chemical on September 3, 2024 and sell it today you would lose (290.00) from holding Double Bond Chemical or give up 6.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Feng Hsin Steel vs. Double Bond Chemical
Performance |
| Timeline |
| Feng Hsin Steel |
| Double Bond Chemical |
Feng Hsin and Double Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Feng Hsin and Double Bond
The main advantage of trading using opposite Feng Hsin and Double Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Feng Hsin position performs unexpectedly, Double Bond 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 Double Bond will offset losses from the drop in Double Bond's long position.The idea behind Feng Hsin Steel and Double Bond Chemical 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.| Double Bond vs. Delta Electronics | Double Bond vs. China Steel Chemical | Double Bond vs. WiseChip Semiconductor | Double Bond vs. Novatek Microelectronics Corp |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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