Correlation Between Tah Hsin and Feng Tay

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

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

Diversification Opportunities for Tah Hsin and Feng Tay

0.44

Correlation Coefficient

Tah Hsin  Feng Tay

Very weak diversification

The 3 months correlation between Tah and Feng is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Tah Hsin Industrial 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 Tah Hsin 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 Tah Hsin Industrial 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 Tah Hsin i.e., Tah Hsin and Feng Tay go up and down completely randomly.

Pair Corralation between Tah Hsin and Feng Tay

Assuming the 90 days trading horizon Tah Hsin is expected to generate 6.78 times less return on investment than Feng Tay. But when comparing it to its historical volatility, Tah Hsin Industrial is 6.93 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 0.12 of returns per unit of risk over similar time horizon. If you would invest  13,300  in Feng Tay Enterprises on September 18, 2024 and sell it today you would earn a total of  700.00  from holding Feng Tay Enterprises or generate 5.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Tah Hsin Industrial  vs.  Feng Tay Enterprises

Tah Hsin Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tah Hsin Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Tah Hsin is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

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 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.

Pair Trading with Tah Hsin and Feng Tay

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