Correlation Between Feng Tay and Lihtai Construction
Can any of the company-specific risk be diversified away by investing in both Feng Tay and Lihtai Construction 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 Lihtai Construction 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 Lihtai Construction Enterprise, you can compare the effects of market volatilities on Feng Tay and Lihtai Construction 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 Lihtai Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Feng Tay and Lihtai Construction.
Diversification Opportunities for Feng Tay and Lihtai Construction
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Feng and Lihtai is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Feng Tay Enterprises and Lihtai Construction Enterprise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lihtai Construction 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 Lihtai Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lihtai Construction has no effect on the direction of Feng Tay i.e., Feng Tay and Lihtai Construction go up and down completely randomly.
Pair Corralation between Feng Tay and Lihtai Construction
Assuming the 90 days trading horizon Feng Tay Enterprises is expected to under-perform the Lihtai Construction. In addition to that, Feng Tay is 1.23 times more volatile than Lihtai Construction Enterprise. It trades about -0.04 of its total potential returns per unit of risk. Lihtai Construction Enterprise is currently generating about 0.07 per unit of volatility. If you would invest 5,313 in Lihtai Construction Enterprise on October 30, 2024 and sell it today you would earn a total of 2,917 from holding Lihtai Construction Enterprise or generate 54.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Feng Tay Enterprises vs. Lihtai Construction Enterprise
Performance |
| Timeline |
| Feng Tay Enterprises |
| Lihtai Construction |
Feng Tay and Lihtai Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Feng Tay and Lihtai Construction
The main advantage of trading using opposite Feng Tay and Lihtai Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Feng Tay position performs unexpectedly, Lihtai Construction 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 Lihtai Construction will offset losses from the drop in Lihtai Construction'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 |
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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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