Correlation Between Feng Hsin and Yieh Phui

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

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

Diversification Opportunities for Feng Hsin and Yieh Phui

0.5

Correlation Coefficient

Feng Hsin  Yieh Phui

Very weak diversification

The 3 months correlation between Feng and Yieh is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Feng Hsin Steel and Yieh Phui Enterprise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yieh Phui Enterprise and Feng 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 Feng Hsin Steel are associated (or correlated) with Yieh Phui. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yieh Phui Enterprise has no effect on the direction of Feng Hsin i.e., Feng Hsin and Yieh Phui go up and down completely randomly.

Pair Corralation between Feng Hsin and Yieh Phui

Assuming the 90 days trading horizon Feng Hsin is expected to generate 2.99 times less return on investment than Yieh Phui. But when comparing it to its historical volatility, Feng Hsin Steel is 1.45 times less risky than Yieh Phui. It trades about 0.04 of its potential returns per unit of risk. Yieh Phui Enterprise is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,455  in Yieh Phui Enterprise on December 26, 2024 and sell it today you would earn a total of  115.00  from holding Yieh Phui Enterprise or generate 7.9% return on investment over 90 days.

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

Feng Hsin Steel  vs.  Yieh Phui Enterprise

Feng Hsin Steel

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Feng Hsin Steel are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Feng Hsin is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Yieh Phui Enterprise

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Yieh Phui Enterprise are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Yieh Phui may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Feng Hsin and Yieh Phui

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

The idea behind Feng Hsin Steel and Yieh Phui Enterprise 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 Stocks Directory module to find actively traded stocks across global markets.