Correlation Between Feng Hsin and Yeou Yih

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

Diversification Opportunities for Feng Hsin and Yeou Yih

0.86

Correlation Coefficient

Feng Hsin  Yeou Yih

Very poor diversification

The 3 months correlation between Feng and Yeou is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Feng Hsin Steel and Yeou Yih Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yeou Yih Steel 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 Yeou Yih. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yeou Yih Steel has no effect on the direction of Feng Hsin i.e., Feng Hsin and Yeou Yih go up and down completely randomly.

Pair Corralation between Feng Hsin and Yeou Yih

Assuming the 90 days trading horizon Feng Hsin Steel is expected to under-perform the Yeou Yih. In addition to that, Feng Hsin is 1.74 times more volatile than Yeou Yih Steel. It trades about -0.24 of its total potential returns per unit of risk. Yeou Yih Steel is currently generating about -0.19 per unit of volatility. If you would invest  1,565  in Yeou Yih Steel on October 27, 2024 and sell it today you would lose (155.00) from holding Yeou Yih Steel or give up 9.9% of portfolio value over 90 days.

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

Feng Hsin Steel  vs.  Yeou Yih Steel

Feng Hsin Steel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Feng Hsin Steel has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Yeou Yih Steel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Yeou Yih Steel 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 Hsin and Yeou Yih

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

The idea behind Feng Hsin Steel and Yeou Yih Steel 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.