Correlation Between Feng Tay and Taiwan Fu
Can any of the company-specific risk be diversified away by investing in both Feng Tay and Taiwan Fu 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 Taiwan Fu 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 Taiwan Fu Hsing, you can compare the effects of market volatilities on Feng Tay and Taiwan Fu 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 Taiwan Fu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Feng Tay and Taiwan Fu.
Diversification Opportunities for Feng Tay and Taiwan Fu
Poor diversification
The 3 months correlation between Feng and Taiwan is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Feng Tay Enterprises and Taiwan Fu Hsing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taiwan Fu Hsing 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 Taiwan Fu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taiwan Fu Hsing has no effect on the direction of Feng Tay i.e., Feng Tay and Taiwan Fu go up and down completely randomly.
Pair Corralation between Feng Tay and Taiwan Fu
Assuming the 90 days trading horizon Feng Tay Enterprises is expected to under-perform the Taiwan Fu. But the stock apears to be less risky and, when comparing its historical volatility, Feng Tay Enterprises is 2.0 times less risky than Taiwan Fu. The stock trades about -0.27 of its potential returns per unit of risk. The Taiwan Fu Hsing is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 5,280 in Taiwan Fu Hsing on September 1, 2024 and sell it today you would earn a total of 60.00 from holding Taiwan Fu Hsing or generate 1.14% 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. Taiwan Fu Hsing
Performance |
| Timeline |
| Feng Tay Enterprises |
| Taiwan Fu Hsing |
Feng Tay and Taiwan Fu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Feng Tay and Taiwan Fu
The main advantage of trading using opposite Feng Tay and Taiwan Fu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Feng Tay position performs unexpectedly, Taiwan Fu 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 Taiwan Fu will offset losses from the drop in Taiwan Fu'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 |
| Taiwan Fu vs. Taiwan Shin Kong | Taiwan Fu vs. Taiwan Secom Co | Taiwan Fu vs. Pou Chen Corp | Taiwan Fu vs. Taiwan Hon Chuan |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
Other Complementary Tools
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk |