Correlation Between Feng Tay and I Hwa

Can any of the company-specific risk be diversified away by investing in both Feng Tay and I Hwa 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 I Hwa 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 I Hwa Industrial Co, you can compare the effects of market volatilities on Feng Tay and I Hwa 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 I Hwa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Feng Tay and I Hwa.

Diversification Opportunities for Feng Tay and I Hwa

0.32

Correlation Coefficient

Feng Tay  I Hwa

Weak diversification

The 3 months correlation between Feng and 1456 is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Feng Tay Enterprises and I Hwa Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on I Hwa Industrial 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 I Hwa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of I Hwa Industrial has no effect on the direction of Feng Tay i.e., Feng Tay and I Hwa go up and down completely randomly.

Pair Corralation between Feng Tay and I Hwa

Assuming the 90 days trading horizon Feng Tay Enterprises is expected to under-perform the I Hwa. But the stock apears to be less risky and, when comparing its historical volatility, Feng Tay Enterprises is 1.45 times less risky than I Hwa. The stock trades about -0.02 of its potential returns per unit of risk. The I Hwa Industrial Co is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,665  in I Hwa Industrial Co on September 12, 2024 and sell it today you would earn a total of  10.00  from holding I Hwa Industrial Co or generate 0.6% return on investment over 90 days.

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

Feng Tay Enterprises  vs.  I Hwa Industrial Co

Feng Tay Enterprises

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Feng Tay Enterprises are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Feng Tay is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

I Hwa Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days I Hwa Industrial Co 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 Feng Tay and I Hwa

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

The idea behind Feng Tay Enterprises and I Hwa Industrial Co 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.

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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.