Correlation Between Kenda Rubber and Feng Tay
Can any of the company-specific risk be diversified away by investing in both Kenda Rubber 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 Kenda Rubber and Feng Tay into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kenda Rubber Industrial and Feng Tay Enterprises, you can compare the effects of market volatilities on Kenda Rubber 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 Kenda Rubber with a short position of Feng Tay. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kenda Rubber and Feng Tay.
Diversification Opportunities for Kenda Rubber and Feng Tay
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kenda and Feng is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Kenda Rubber Industrial 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 Kenda Rubber 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 Kenda Rubber Industrial 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 Kenda Rubber i.e., Kenda Rubber and Feng Tay go up and down completely randomly.
Pair Corralation between Kenda Rubber and Feng Tay
Assuming the 90 days trading horizon Kenda Rubber Industrial is expected to under-perform the Feng Tay. But the stock apears to be less risky and, when comparing its historical volatility, Kenda Rubber Industrial is 2.24 times less risky than Feng Tay. The stock trades about -0.17 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 14,200 in Feng Tay Enterprises on September 12, 2024 and sell it today you would lose (150.00) from holding Feng Tay Enterprises or give up 1.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kenda Rubber Industrial vs. Feng Tay Enterprises
Performance |
| Timeline |
| Kenda Rubber Industrial |
| Feng Tay Enterprises |
Kenda Rubber and Feng Tay Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kenda Rubber and Feng Tay
The main advantage of trading using opposite Kenda Rubber and Feng Tay positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kenda Rubber 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.| Kenda Rubber vs. Feng Tay Enterprises | Kenda Rubber vs. Ruentex Development Co | Kenda Rubber vs. WiseChip Semiconductor | Kenda Rubber vs. Novatek Microelectronics Corp |
| 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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