Correlation Between Feng Hsin and Song Ho
Can any of the company-specific risk be diversified away by investing in both Feng Hsin and Song Ho 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 Song Ho 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 Song Ho Industrial, you can compare the effects of market volatilities on Feng Hsin and Song Ho 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 Song Ho. Check out your portfolio center. Please also check ongoing floating volatility patterns of Feng Hsin and Song Ho.
Diversification Opportunities for Feng Hsin and Song Ho
Average diversification
The 3 months correlation between Feng and Song is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Feng Hsin Steel and Song Ho Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Song Ho Industrial 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 Song Ho. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Song Ho Industrial has no effect on the direction of Feng Hsin i.e., Feng Hsin and Song Ho go up and down completely randomly.
Pair Corralation between Feng Hsin and Song Ho
Assuming the 90 days trading horizon Feng Hsin Steel is expected to under-perform the Song Ho. In addition to that, Feng Hsin is 4.52 times more volatile than Song Ho Industrial. It trades about -0.21 of its total potential returns per unit of risk. Song Ho Industrial is currently generating about 0.12 per unit of volatility. If you would invest 2,730 in Song Ho Industrial on August 26, 2024 and sell it today you would earn a total of 25.00 from holding Song Ho Industrial or generate 0.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Feng Hsin Steel vs. Song Ho Industrial
Performance |
| Timeline |
| Feng Hsin Steel |
| Song Ho Industrial |
Feng Hsin and Song Ho Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Feng Hsin and Song Ho
The main advantage of trading using opposite Feng Hsin and Song Ho positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Feng Hsin position performs unexpectedly, Song Ho 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 Song Ho will offset losses from the drop in Song Ho's long position.| Feng Hsin vs. Cheng Shin Rubber | Feng Hsin vs. Taiwan Cement Corp | Feng Hsin vs. China Steel Chemical | Feng Hsin vs. Yulon Motor Co |
| Song Ho vs. China Steel Corp | Song Ho vs. Chung Hung Steel | Song Ho vs. Tung Ho Steel | Song Ho vs. Feng Hsin 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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