Correlation Between Chaintech Technology and Feng Tay
Can any of the company-specific risk be diversified away by investing in both Chaintech Technology 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 Chaintech Technology and Feng Tay into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chaintech Technology Corp and Feng Tay Enterprises, you can compare the effects of market volatilities on Chaintech Technology 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 Chaintech Technology with a short position of Feng Tay. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chaintech Technology and Feng Tay.
Diversification Opportunities for Chaintech Technology and Feng Tay
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Chaintech and Feng is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Chaintech Technology 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 Chaintech Technology 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 Chaintech Technology 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 Chaintech Technology i.e., Chaintech Technology and Feng Tay go up and down completely randomly.
Pair Corralation between Chaintech Technology and Feng Tay
Assuming the 90 days trading horizon Chaintech Technology Corp is expected to generate 1.73 times more return on investment than Feng Tay. However, Chaintech Technology is 1.73 times more volatile than Feng Tay Enterprises. It trades about -0.02 of its potential returns per unit of risk. Feng Tay Enterprises is currently generating about -0.07 per unit of risk. If you would invest 4,720 in Chaintech Technology Corp on September 3, 2024 and sell it today you would lose (975.00) from holding Chaintech Technology Corp or give up 20.66% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chaintech Technology Corp vs. Feng Tay Enterprises
Performance |
| Timeline |
| Chaintech Technology Corp |
| Feng Tay Enterprises |
Chaintech Technology and Feng Tay Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chaintech Technology and Feng Tay
The main advantage of trading using opposite Chaintech Technology and Feng Tay positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chaintech Technology 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.| Chaintech Technology vs. Taiwan Semiconductor Manufacturing | Chaintech Technology vs. Yang Ming Marine | Chaintech Technology vs. ASE Industrial Holding | Chaintech Technology vs. AU Optronics |
| Feng Tay vs. Tainan Spinning Co | Feng Tay vs. Chia Her Industrial | Feng Tay vs. WiseChip Semiconductor | Feng Tay vs. Novatek Microelectronics Corp |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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