Correlation Between Tenaga Nasional and Feytech Holdings

Can any of the company-specific risk be diversified away by investing in both Tenaga Nasional and Feytech Holdings 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 Tenaga Nasional and Feytech Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Tenaga Nasional Bhd and Feytech Holdings Berhad, you can compare the effects of market volatilities on Tenaga Nasional and Feytech Holdings 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 Tenaga Nasional with a short position of Feytech Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tenaga Nasional and Feytech Holdings.

Diversification Opportunities for Tenaga Nasional and Feytech Holdings

0.65

Correlation Coefficient

Tenaga Nasional  Feytech Holdings

Poor diversification

The 3 months correlation between Tenaga and Feytech is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Tenaga Nasional Bhd and Feytech Holdings Berhad in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Feytech Holdings Berhad and Tenaga Nasional 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 Tenaga Nasional Bhd are associated (or correlated) with Feytech Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Feytech Holdings Berhad has no effect on the direction of Tenaga Nasional i.e., Tenaga Nasional and Feytech Holdings go up and down completely randomly.

Pair Corralation between Tenaga Nasional and Feytech Holdings

Assuming the 90 days trading horizon Tenaga Nasional Bhd is expected to generate 0.46 times more return on investment than Feytech Holdings. However, Tenaga Nasional Bhd is 2.18 times less risky than Feytech Holdings. It trades about -0.05 of its potential returns per unit of risk. Feytech Holdings Berhad is currently generating about -0.25 per unit of risk. If you would invest  1,418  in Tenaga Nasional Bhd on December 25, 2024 and sell it today you would lose (58.00) from holding Tenaga Nasional Bhd or give up 4.09% of portfolio value over 90 days.

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

Tenaga Nasional Bhd  vs.  Feytech Holdings Berhad

Tenaga Nasional Bhd

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tenaga Nasional Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Tenaga Nasional is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Feytech Holdings Berhad

Risk-Adjusted Performance

Very Weak

Over the last 90 days Feytech Holdings Berhad has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Tenaga Nasional and Feytech Holdings

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

The idea behind Tenaga Nasional Bhd and Feytech Holdings Berhad 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.