Correlation Between Feng Ching and Great China
Can any of the company-specific risk be diversified away by investing in both Feng Ching and Great China 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 Great China 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 Great China Metal, you can compare the effects of market volatilities on Feng Ching and Great China 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 Great China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Feng Ching and Great China.
Diversification Opportunities for Feng Ching and Great China
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Feng and Great is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Feng Ching Metal and Great China Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great China Metal 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 Great China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great China Metal has no effect on the direction of Feng Ching i.e., Feng Ching and Great China go up and down completely randomly.
Pair Corralation between Feng Ching and Great China
Assuming the 90 days trading horizon Feng Ching Metal is expected to under-perform the Great China. In addition to that, Feng Ching is 6.57 times more volatile than Great China Metal. It trades about 0.0 of its total potential returns per unit of risk. Great China Metal is currently generating about 0.0 per unit of volatility. If you would invest 2,388 in Great China Metal on November 28, 2024 and sell it today you would lose (8.00) from holding Great China Metal or give up 0.34% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Feng Ching Metal vs. Great China Metal
Performance |
| Timeline |
| Feng Ching Metal |
| Great China Metal |
Feng Ching and Great China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Feng Ching and Great China
The main advantage of trading using opposite Feng Ching and Great China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Feng Ching position performs unexpectedly, Great China 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 Great China will offset losses from the drop in Great China's long position.| Feng Ching vs. Da Cin Construction Co | Feng Ching vs. China Construction Bank | Feng Ching vs. Lihtai Construction Enterprise | Feng Ching vs. Advanced Wireless Semiconductor |
| Great China vs. Taiwan Hon Chuan | Great China vs. Taiwan Secom Co | Great China vs. Taiwan Fu Hsing | Great China vs. Taiwan Shin Kong |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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