Correlation Between Yieh Phui and Feng Hsin

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

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

Diversification Opportunities for Yieh Phui and Feng Hsin

0.39

Correlation Coefficient

Yieh Phui  Feng Hsin

Weak diversification

The 3 months correlation between Yieh and Feng is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Yieh Phui Enterprise and Feng Hsin Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Feng Hsin Steel and Yieh Phui 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 Yieh Phui Enterprise are associated (or correlated) with Feng Hsin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Feng Hsin Steel has no effect on the direction of Yieh Phui i.e., Yieh Phui and Feng Hsin go up and down completely randomly.

Pair Corralation between Yieh Phui and Feng Hsin

Assuming the 90 days trading horizon Yieh Phui Enterprise is expected to generate 0.9 times more return on investment than Feng Hsin. However, Yieh Phui Enterprise is 1.11 times less risky than Feng Hsin. It trades about -0.09 of its potential returns per unit of risk. Feng Hsin Steel is currently generating about -0.23 per unit of risk. If you would invest  1,520  in Yieh Phui Enterprise on October 10, 2024 and sell it today you would lose (40.00) from holding Yieh Phui Enterprise or give up 2.63% of portfolio value over 90 days.

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

Yieh Phui Enterprise  vs.  Feng Hsin Steel

Yieh Phui Enterprise

Risk-Adjusted Performance

0 of 100

Very Weak

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

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.

Pair Trading with Yieh Phui and Feng Hsin

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

The idea behind Yieh Phui Enterprise and Feng Hsin 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.