Correlation Between Feng Ching and Chernan Metal
Can any of the company-specific risk be diversified away by investing in both Feng Ching and Chernan Metal 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 Ching and Chernan Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Feng Ching Metal and Chernan Metal Industrial, you can compare the effects of market volatilities on Feng Ching and Chernan Metal 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 Ching with a short position of Chernan Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Feng Ching and Chernan Metal.
Diversification Opportunities for Feng Ching and Chernan Metal
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Feng and Chernan is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Feng Ching Metal and Chernan Metal Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chernan Metal Industrial and Feng Ching 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 Ching Metal are associated (or correlated) with Chernan Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chernan Metal Industrial has no effect on the direction of Feng Ching i.e., Feng Ching and Chernan Metal go up and down completely randomly.
Pair Corralation between Feng Ching and Chernan Metal
Assuming the 90 days trading horizon Feng Ching Metal is expected to generate 0.74 times more return on investment than Chernan Metal. However, Feng Ching Metal is 1.35 times less risky than Chernan Metal. It trades about -0.02 of its potential returns per unit of risk. Chernan Metal Industrial is currently generating about -0.07 per unit of risk. If you would invest 1,925 in Feng Ching Metal on September 5, 2024 and sell it today you would lose (20.00) from holding Feng Ching Metal or give up 1.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Feng Ching Metal vs. Chernan Metal Industrial
Performance |
| Timeline |
| Feng Ching Metal |
| Chernan Metal Industrial |
Feng Ching and Chernan Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Feng Ching and Chernan Metal
The main advantage of trading using opposite Feng Ching and Chernan Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Feng Ching position performs unexpectedly, Chernan Metal 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 Chernan Metal will offset losses from the drop in Chernan Metal's long position.| Feng Ching vs. Eclat Textile Co | Feng Ching vs. WiseChip Semiconductor | Feng Ching vs. Novatek Microelectronics Corp | Feng Ching vs. Leader Electronics |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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