Correlation Between Federal Corp and Feng Tay
Can any of the company-specific risk be diversified away by investing in both Federal Corp and Feng Tay 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 Federal Corp and Feng Tay into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federal Corp and Feng Tay Enterprises, you can compare the effects of market volatilities on Federal Corp and Feng Tay 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 Federal Corp with a short position of Feng Tay. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal Corp and Feng Tay.
Diversification Opportunities for Federal Corp and Feng Tay
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Federal and Feng is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Federal Corp and Feng Tay Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Feng Tay Enterprises and Federal Corp 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 Federal Corp are associated (or correlated) with Feng Tay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Feng Tay Enterprises has no effect on the direction of Federal Corp i.e., Federal Corp and Feng Tay go up and down completely randomly.
Pair Corralation between Federal Corp and Feng Tay
Assuming the 90 days trading horizon Federal Corp is expected to under-perform the Feng Tay. But the stock apears to be less risky and, when comparing its historical volatility, Federal Corp is 2.05 times less risky than Feng Tay. The stock trades about -0.15 of its potential returns per unit of risk. The Feng Tay Enterprises is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 14,000 in Feng Tay Enterprises on September 13, 2024 and sell it today you would lose (200.00) from holding Feng Tay Enterprises or give up 1.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 97.73% |
| Values | Daily Returns |
Federal Corp vs. Feng Tay Enterprises
Performance |
| Timeline |
| Federal Corp |
| Feng Tay Enterprises |
Federal Corp and Feng Tay Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federal Corp and Feng Tay
The main advantage of trading using opposite Federal Corp and Feng Tay positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federal Corp position performs unexpectedly, Feng Tay 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 Feng Tay will offset losses from the drop in Feng Tay's long position.| Federal Corp vs. Nankang Rubber Tire | Federal Corp vs. Kenda Rubber Industrial | Federal Corp vs. Formosan Rubber Group | Federal Corp vs. Yulon Motor Co |
| Feng Tay vs. Pou Chen Corp | Feng Tay vs. Eclat Textile Co | Feng Tay vs. Hotai Motor Co | Feng Tay vs. Giant Manufacturing Co |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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