Correlation Between Landis Taipei and Feng Hsin
Can any of the company-specific risk be diversified away by investing in both Landis Taipei and Feng Hsin 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 Landis Taipei and Feng Hsin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Landis Taipei Hotel and Feng Hsin Steel, you can compare the effects of market volatilities on Landis Taipei and Feng Hsin 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 Landis Taipei with a short position of Feng Hsin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Landis Taipei and Feng Hsin.
Diversification Opportunities for Landis Taipei and Feng Hsin
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Landis and Feng is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Landis Taipei Hotel and Feng Hsin Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Feng Hsin Steel and Landis Taipei 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 Landis Taipei Hotel are associated (or correlated) with Feng Hsin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Feng Hsin Steel has no effect on the direction of Landis Taipei i.e., Landis Taipei and Feng Hsin go up and down completely randomly.
Pair Corralation between Landis Taipei and Feng Hsin
Assuming the 90 days trading horizon Landis Taipei Hotel is expected to generate 1.03 times more return on investment than Feng Hsin. However, Landis Taipei is 1.03 times more volatile than Feng Hsin Steel. It trades about -0.01 of its potential returns per unit of risk. Feng Hsin Steel is currently generating about -0.2 per unit of risk. If you would invest 1,870 in Landis Taipei Hotel on August 28, 2024 and sell it today you would lose (15.00) from holding Landis Taipei Hotel or give up 0.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Landis Taipei Hotel vs. Feng Hsin Steel
Performance |
| Timeline |
| Landis Taipei Hotel |
| Feng Hsin Steel |
Landis Taipei and Feng Hsin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Landis Taipei and Feng Hsin
The main advantage of trading using opposite Landis Taipei and Feng Hsin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Landis Taipei position performs unexpectedly, Feng Hsin 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 Hsin will offset losses from the drop in Feng Hsin's long position.| Landis Taipei vs. Formosa International Hotels | Landis Taipei vs. Ambassador Hotel | Landis Taipei vs. FDC International Hotels | Landis Taipei vs. First Hotel 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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