Correlation Between Tycoons Worldwide and Feng Hsin

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

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

Diversification Opportunities for Tycoons Worldwide and Feng Hsin

0.65

Correlation Coefficient

Tycoons Worldwide  Feng Hsin

Poor diversification

The 3 months correlation between Tycoons and Feng is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Tycoons Worldwide Group 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 Tycoons Worldwide 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 Tycoons Worldwide Group 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 Tycoons Worldwide i.e., Tycoons Worldwide and Feng Hsin go up and down completely randomly.

Pair Corralation between Tycoons Worldwide and Feng Hsin

Assuming the 90 days trading horizon Tycoons Worldwide Group is expected to under-perform the Feng Hsin. But the stock apears to be less risky and, when comparing its historical volatility, Tycoons Worldwide Group is 1.1 times less risky than Feng Hsin. The stock trades about -0.03 of its potential returns per unit of risk. The Feng Hsin Steel is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  7,060  in Feng Hsin Steel on December 28, 2024 and sell it today you would lose (210.00) from holding Feng Hsin Steel or give up 2.97% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.21%
Values	Daily Returns

Tycoons Worldwide Group  vs.  Feng Hsin Steel

Tycoons Worldwide

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tycoons Worldwide Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Tycoons Worldwide is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Feng Hsin Steel

Risk-Adjusted Performance

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 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.

Pair Trading with Tycoons Worldwide and Feng Hsin

The main advantage of trading using opposite Tycoons Worldwide and Feng Hsin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tycoons Worldwide 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 Tycoons Worldwide Group 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.

Check out your portfolio center.

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.