Correlation Between Grape King and Feng Tay

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

By analyzing existing cross correlation between Grape King Bio and Feng Tay Enterprises, you can compare the effects of market volatilities on Grape King 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 Grape King with a short position of Feng Tay. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grape King and Feng Tay.

Diversification Opportunities for Grape King and Feng Tay

-0.54

Correlation Coefficient

Grape King  Feng Tay

Excellent diversification

The 3 months correlation between Grape and Feng is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Grape King Bio 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 Grape King 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 Grape King Bio 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 Grape King i.e., Grape King and Feng Tay go up and down completely randomly.

Pair Corralation between Grape King and Feng Tay

Assuming the 90 days trading horizon Grape King Bio is expected to generate 0.53 times more return on investment than Feng Tay. However, Grape King Bio is 1.87 times less risky than Feng Tay. It trades about 0.12 of its potential returns per unit of risk. Feng Tay Enterprises is currently generating about -0.06 per unit of risk. If you would invest  14,400  in Grape King Bio on September 2, 2024 and sell it today you would earn a total of  1,100  from holding Grape King Bio or generate 7.64% return on investment over 90 days.

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

Grape King Bio  vs.  Feng Tay Enterprises

Grape King Bio

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Grape King Bio are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Grape King may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Feng Tay Enterprises

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Feng Tay Enterprises has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Grape King and Feng Tay

The main advantage of trading using opposite Grape King and Feng Tay positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grape King 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.

The idea behind Grape King Bio and Feng Tay Enterprises 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.