Correlation Between Feng Tay and Hotel Holiday
Can any of the company-specific risk be diversified away by investing in both Feng Tay and Hotel Holiday 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 Hotel Holiday 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 Hotel Holiday Garden, you can compare the effects of market volatilities on Feng Tay and Hotel Holiday 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 Hotel Holiday. Check out your portfolio center. Please also check ongoing floating volatility patterns of Feng Tay and Hotel Holiday.
Diversification Opportunities for Feng Tay and Hotel Holiday
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Feng and Hotel is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Feng Tay Enterprises and Hotel Holiday Garden in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hotel Holiday Garden 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 Hotel Holiday. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hotel Holiday Garden has no effect on the direction of Feng Tay i.e., Feng Tay and Hotel Holiday go up and down completely randomly.
Pair Corralation between Feng Tay and Hotel Holiday
Assuming the 90 days trading horizon Feng Tay Enterprises is expected to generate 3.55 times more return on investment than Hotel Holiday. However, Feng Tay is 3.55 times more volatile than Hotel Holiday Garden. It trades about 0.08 of its potential returns per unit of risk. Hotel Holiday Garden is currently generating about -0.35 per unit of risk. If you would invest 13,650 in Feng Tay Enterprises on September 14, 2024 and sell it today you would earn a total of 450.00 from holding Feng Tay Enterprises or generate 3.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Feng Tay Enterprises vs. Hotel Holiday Garden
Performance |
| Timeline |
| Feng Tay Enterprises |
| Hotel Holiday Garden |
Feng Tay and Hotel Holiday Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Feng Tay and Hotel Holiday
The main advantage of trading using opposite Feng Tay and Hotel Holiday positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Feng Tay position performs unexpectedly, Hotel Holiday 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 Hotel Holiday will offset losses from the drop in Hotel Holiday'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 |
| Hotel Holiday vs. First Hotel Co | Hotel Holiday vs. Leofoo Development Co | Hotel Holiday vs. Taiwan Tea Corp | Hotel Holiday vs. China Container Terminal |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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