Correlation Between Prime Oil and Feng Ching
Can any of the company-specific risk be diversified away by investing in both Prime Oil 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 Prime Oil and Feng Ching into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prime Oil Chemical and Feng Ching Metal, you can compare the effects of market volatilities on Prime Oil 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 Prime Oil with a short position of Feng Ching. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prime Oil and Feng Ching.
Diversification Opportunities for Prime Oil and Feng Ching
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Prime and Feng is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Prime Oil Chemical 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 Prime Oil 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 Prime Oil Chemical 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 Prime Oil i.e., Prime Oil and Feng Ching go up and down completely randomly.
Pair Corralation between Prime Oil and Feng Ching
Assuming the 90 days trading horizon Prime Oil Chemical is expected to generate 0.28 times more return on investment than Feng Ching. However, Prime Oil Chemical is 3.62 times less risky than Feng Ching. It trades about -0.05 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 1,785 in Prime Oil Chemical on October 23, 2024 and sell it today you would lose (10.00) from holding Prime Oil Chemical or give up 0.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prime Oil Chemical vs. Feng Ching Metal
Performance |
| Timeline |
| Prime Oil Chemical |
| Feng Ching Metal |
Prime Oil and Feng Ching Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prime Oil and Feng Ching
The main advantage of trading using opposite Prime Oil and Feng Ching positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prime Oil 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.| Prime Oil vs. President Chain Store | Prime Oil vs. Huaku Development Co | Prime Oil vs. Formosa International Hotels | Prime Oil vs. Mercuries Associates Holding |
| 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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