Correlation Between Feng Tay and Acelon Chemicals

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

By analyzing existing cross correlation between Feng Tay Enterprises and Acelon Chemicals Fiber, you can compare the effects of market volatilities on Feng Tay and Acelon Chemicals 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 Tay with a short position of Acelon Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Feng Tay and Acelon Chemicals.

Diversification Opportunities for Feng Tay and Acelon Chemicals

-0.09

Correlation Coefficient

Feng Tay  Acelon Chemicals

Good diversification

The 3 months correlation between Feng and Acelon is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Feng Tay Enterprises and Acelon Chemicals Fiber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acelon Chemicals Fiber and Feng Tay 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 Tay Enterprises are associated (or correlated) with Acelon Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acelon Chemicals Fiber has no effect on the direction of Feng Tay i.e., Feng Tay and Acelon Chemicals go up and down completely randomly.

Pair Corralation between Feng Tay and Acelon Chemicals

Assuming the 90 days trading horizon Feng Tay Enterprises is expected to under-perform the Acelon Chemicals. But the stock apears to be less risky and, when comparing its historical volatility, Feng Tay Enterprises is 1.83 times less risky than Acelon Chemicals. The stock trades about -0.08 of its potential returns per unit of risk. The Acelon Chemicals Fiber is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  1,195  in Acelon Chemicals Fiber on December 29, 2024 and sell it today you would earn a total of  490.00  from holding Acelon Chemicals Fiber or generate 41.0% return on investment over 90 days.

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

Feng Tay Enterprises  vs.  Acelon Chemicals Fiber

Feng Tay Enterprises

Risk-Adjusted Performance

Very Weak

Over the last 90 days Feng Tay Enterprises 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.

Acelon Chemicals Fiber

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Acelon Chemicals Fiber are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Acelon Chemicals showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Feng Tay and Acelon Chemicals

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

The idea behind Feng Tay Enterprises and Acelon Chemicals Fiber 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.