Correlation Between Feng Tay and Yulon Nissan
Can any of the company-specific risk be diversified away by investing in both Feng Tay and Yulon Nissan 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 Feng Tay and Yulon Nissan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Feng Tay Enterprises and Yulon Nissan Motor, you can compare the effects of market volatilities on Feng Tay and Yulon Nissan 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 Feng Tay with a short position of Yulon Nissan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Feng Tay and Yulon Nissan.
Diversification Opportunities for Feng Tay and Yulon Nissan
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Feng and Yulon is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Feng Tay Enterprises and Yulon Nissan Motor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yulon Nissan Motor and Feng Tay 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 Feng Tay Enterprises are associated (or correlated) with Yulon Nissan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yulon Nissan Motor has no effect on the direction of Feng Tay i.e., Feng Tay and Yulon Nissan go up and down completely randomly.
Pair Corralation between Feng Tay and Yulon Nissan
Assuming the 90 days trading horizon Feng Tay Enterprises is expected to generate 0.95 times more return on investment than Yulon Nissan. However, Feng Tay Enterprises is 1.06 times less risky than Yulon Nissan. It trades about -0.05 of its potential returns per unit of risk. Yulon Nissan Motor is currently generating about -0.16 per unit of risk. If you would invest 18,100 in Feng Tay Enterprises on September 12, 2024 and sell it today you would lose (4,050) from holding Feng Tay Enterprises or give up 22.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Feng Tay Enterprises vs. Yulon Nissan Motor
Performance |
| Timeline |
| Feng Tay Enterprises |
| Yulon Nissan Motor |
Feng Tay and Yulon Nissan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Feng Tay and Yulon Nissan
The main advantage of trading using opposite Feng Tay and Yulon Nissan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Feng Tay position performs unexpectedly, Yulon Nissan 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 Yulon Nissan will offset losses from the drop in Yulon Nissan's long position.| Feng Tay vs. Pou Chen Corp | Feng Tay vs. Eclat Textile Co | Feng Tay vs. Hotai Motor Co | Feng Tay vs. Giant Manufacturing Co |
| Yulon Nissan vs. Feng Tay Enterprises | Yulon Nissan vs. Ruentex Development Co | Yulon Nissan vs. WiseChip Semiconductor | Yulon Nissan 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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