Correlation Between Giant Manufacturing and Feng Tay
Can any of the company-specific risk be diversified away by investing in both Giant Manufacturing and Feng Tay 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 Giant Manufacturing and Feng Tay into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Giant Manufacturing Co and Feng Tay Enterprises, you can compare the effects of market volatilities on Giant Manufacturing and Feng Tay 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 Giant Manufacturing with a short position of Feng Tay. Check out your portfolio center. Please also check ongoing floating volatility patterns of Giant Manufacturing and Feng Tay.
Diversification Opportunities for Giant Manufacturing and Feng Tay
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Giant and Feng is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Giant Manufacturing Co and Feng Tay Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Feng Tay Enterprises and Giant Manufacturing 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 Giant Manufacturing Co are associated (or correlated) with Feng Tay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Feng Tay Enterprises has no effect on the direction of Giant Manufacturing i.e., Giant Manufacturing and Feng Tay go up and down completely randomly.
Pair Corralation between Giant Manufacturing and Feng Tay
Assuming the 90 days trading horizon Giant Manufacturing Co is expected to under-perform the Feng Tay. In addition to that, Giant Manufacturing is 1.54 times more volatile than Feng Tay Enterprises. It trades about -0.38 of its total potential returns per unit of risk. Feng Tay Enterprises is currently generating about -0.21 per unit of volatility. If you would invest 14,150 in Feng Tay Enterprises on August 29, 2024 and sell it today you would lose (850.00) from holding Feng Tay Enterprises or give up 6.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Giant Manufacturing Co vs. Feng Tay Enterprises
Performance |
| Timeline |
| Giant Manufacturing |
| Feng Tay Enterprises |
Giant Manufacturing and Feng Tay Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Giant Manufacturing and Feng Tay
The main advantage of trading using opposite Giant Manufacturing and Feng Tay positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Giant Manufacturing position performs unexpectedly, Feng Tay 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 Feng Tay will offset losses from the drop in Feng Tay's long position.| Giant Manufacturing vs. Taiwan Semiconductor Manufacturing | Giant Manufacturing vs. Hon Hai Precision | Giant Manufacturing vs. MediaTek | Giant Manufacturing vs. Chunghwa Telecom Co |
| Feng Tay vs. Taiwan Semiconductor Manufacturing | Feng Tay vs. Hon Hai Precision | Feng Tay vs. MediaTek | Feng Tay vs. Chunghwa Telecom Co |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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