Correlation Between Victory New and Feng Tay

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

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

Diversification Opportunities for Victory New and Feng Tay

0.54

Correlation Coefficient

Victory New  Feng Tay

Very weak diversification

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

Pair Corralation between Victory New and Feng Tay

Assuming the 90 days trading horizon Victory New Materials is expected to under-perform the Feng Tay. But the stock apears to be less risky and, when comparing its historical volatility, Victory New Materials is 1.31 times less risky than Feng Tay. The stock trades about -0.02 of its potential returns per unit of risk. The Feng Tay Enterprises is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  14,050  in Feng Tay Enterprises on September 15, 2024 and sell it today you would lose (150.00) from holding Feng Tay Enterprises or give up 1.07% of portfolio value over 90 days.

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

Victory New Materials  vs.  Feng Tay Enterprises

Victory New Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Victory New Materials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Victory New 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 Victory New and Feng Tay

The main advantage of trading using opposite Victory New and Feng Tay positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Victory New 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 Victory New Materials 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.