Correlation Between Feng Tay and First Hotel
Can any of the company-specific risk be diversified away by investing in both Feng Tay and First Hotel 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 First Hotel 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 First Hotel Co, you can compare the effects of market volatilities on Feng Tay and First Hotel 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 First Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Feng Tay and First Hotel.
Diversification Opportunities for Feng Tay and First Hotel
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Feng and First is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Feng Tay Enterprises and First Hotel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Hotel 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 First Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Hotel has no effect on the direction of Feng Tay i.e., Feng Tay and First Hotel go up and down completely randomly.
Pair Corralation between Feng Tay and First Hotel
Assuming the 90 days trading horizon Feng Tay Enterprises is expected to generate 4.48 times more return on investment than First Hotel. However, Feng Tay is 4.48 times more volatile than First Hotel Co. It trades about -0.01 of its potential returns per unit of risk. First Hotel Co is currently generating about -0.21 per unit of risk. If you would invest 14,200 in Feng Tay Enterprises on September 12, 2024 and sell it today you would lose (150.00) from holding Feng Tay Enterprises or give up 1.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Feng Tay Enterprises vs. First Hotel Co
Performance |
| Timeline |
| Feng Tay Enterprises |
| First Hotel |
Feng Tay and First Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Feng Tay and First Hotel
The main advantage of trading using opposite Feng Tay and First Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Feng Tay position performs unexpectedly, First Hotel 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 First Hotel will offset losses from the drop in First Hotel'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 |
| First Hotel vs. Feng Tay Enterprises | First Hotel vs. Ruentex Development Co | First Hotel vs. WiseChip Semiconductor | First Hotel 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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