Correlation Between Nien Made and Feng Tay
Can any of the company-specific risk be diversified away by investing in both Nien Made 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 Nien Made and Feng Tay into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nien Made Enterprise and Feng Tay Enterprises, you can compare the effects of market volatilities on Nien Made 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 Nien Made with a short position of Feng Tay. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nien Made and Feng Tay.
Diversification Opportunities for Nien Made and Feng Tay
Poor diversification
The 3 months correlation between Nien and Feng is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Nien Made Enterprise 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 Nien Made 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 Nien Made Enterprise 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 Nien Made i.e., Nien Made and Feng Tay go up and down completely randomly.
Pair Corralation between Nien Made and Feng Tay
Assuming the 90 days trading horizon Nien Made Enterprise is expected to generate 1.4 times more return on investment than Feng Tay. However, Nien Made is 1.4 times more volatile than Feng Tay Enterprises. It trades about 0.05 of its potential returns per unit of risk. Feng Tay Enterprises is currently generating about -0.05 per unit of risk. If you would invest 35,700 in Nien Made Enterprise on September 2, 2024 and sell it today you would earn a total of 4,300 from holding Nien Made Enterprise or generate 12.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nien Made Enterprise vs. Feng Tay Enterprises
Performance |
| Timeline |
| Nien Made Enterprise |
| Feng Tay Enterprises |
Nien Made and Feng Tay Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nien Made and Feng Tay
The main advantage of trading using opposite Nien Made and Feng Tay positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nien Made 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.| Nien Made vs. Chaintech Technology Corp | Nien Made vs. Avision | Nien Made vs. Clevo Co | Nien Made vs. Elitegroup Computer Systems |
| Feng Tay vs. Chaintech Technology Corp | Feng Tay vs. Avision | Feng Tay vs. Clevo Co | Feng Tay vs. Elitegroup Computer Systems |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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