Correlation Between Tex Ray and Feng Ching

Can any of the company-specific risk be diversified away by investing in both Tex Ray and Feng Ching 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 Tex Ray and Feng Ching into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Tex Ray Industrial Co and Feng Ching Metal, you can compare the effects of market volatilities on Tex Ray and Feng Ching 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 Tex Ray with a short position of Feng Ching. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tex Ray and Feng Ching.

Diversification Opportunities for Tex Ray and Feng Ching

-0.59

Correlation Coefficient

Tex Ray  Feng Ching

Excellent diversification

The 3 months correlation between Tex and Feng is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Tex Ray Industrial Co and Feng Ching Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Feng Ching Metal and Tex Ray 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 Tex Ray Industrial Co are associated (or correlated) with Feng Ching. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Feng Ching Metal has no effect on the direction of Tex Ray i.e., Tex Ray and Feng Ching go up and down completely randomly.

Pair Corralation between Tex Ray and Feng Ching

Assuming the 90 days trading horizon Tex Ray Industrial Co is expected to under-perform the Feng Ching. But the stock apears to be less risky and, when comparing its historical volatility, Tex Ray Industrial Co is 1.43 times less risky than Feng Ching. The stock trades about -0.37 of its potential returns per unit of risk. The Feng Ching Metal is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,940  in Feng Ching Metal on September 17, 2024 and sell it today you would earn a total of  45.00  from holding Feng Ching Metal or generate 2.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Tex Ray Industrial Co  vs.  Feng Ching Metal

Tex Ray Industrial

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Tex Ray Industrial Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Tex Ray is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Feng Ching Metal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Feng Ching Metal has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Tex Ray and Feng Ching

The main advantage of trading using opposite Tex Ray and Feng Ching positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tex Ray position performs unexpectedly, Feng Ching 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 Ching will offset losses from the drop in Feng Ching's long position.

The idea behind Tex Ray Industrial Co and Feng Ching Metal pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.