Correlation Between Lien Chang and Feng Ching
Can any of the company-specific risk be diversified away by investing in both Lien Chang and Feng Ching 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 Lien Chang and Feng Ching into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lien Chang Electronic and Feng Ching Metal, you can compare the effects of market volatilities on Lien Chang and Feng Ching 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 Lien Chang with a short position of Feng Ching. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lien Chang and Feng Ching.
Diversification Opportunities for Lien Chang and Feng Ching
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lien and Feng is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Lien Chang Electronic and Feng Ching Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Feng Ching Metal and Lien Chang 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 Lien Chang Electronic are associated (or correlated) with Feng Ching. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Feng Ching Metal has no effect on the direction of Lien Chang i.e., Lien Chang and Feng Ching go up and down completely randomly.
Pair Corralation between Lien Chang and Feng Ching
Assuming the 90 days trading horizon Lien Chang Electronic is expected to generate 1.46 times more return on investment than Feng Ching. However, Lien Chang is 1.46 times more volatile than Feng Ching Metal. It trades about 0.07 of its potential returns per unit of risk. Feng Ching Metal is currently generating about -0.09 per unit of risk. If you would invest 1,365 in Lien Chang Electronic on October 22, 2024 and sell it today you would earn a total of 45.00 from holding Lien Chang Electronic or generate 3.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lien Chang Electronic vs. Feng Ching Metal
Performance |
| Timeline |
| Lien Chang Electronic |
| Feng Ching Metal |
Lien Chang and Feng Ching Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lien Chang and Feng Ching
The main advantage of trading using opposite Lien Chang and Feng Ching positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lien Chang position performs unexpectedly, Feng Ching 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 Ching will offset losses from the drop in Feng Ching's long position.| Lien Chang vs. Hitron Technologies | Lien Chang vs. Universal Microelectronics Co | Lien Chang vs. Pan International Industrial Corp | Lien Chang vs. Sunonwealth Electric Machine |
| Feng Ching vs. Silicon Power Computer | Feng Ching vs. RiTdisplay Corp | Feng Ching vs. Yuan High Tech Development | Feng Ching vs. Prime Oil Chemical |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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