Correlation Between Feng Tay and Paiho Shih

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

Diversification Opportunities for Feng Tay and Paiho Shih

0.16

Correlation Coefficient

Feng Tay  Paiho Shih

Average diversification

The 3 months correlation between Feng and Paiho is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Feng Tay Enterprises and Paiho Shih Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Paiho Shih Holdings 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 Paiho Shih. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Paiho Shih Holdings has no effect on the direction of Feng Tay i.e., Feng Tay and Paiho Shih go up and down completely randomly.

Pair Corralation between Feng Tay and Paiho Shih

Assuming the 90 days trading horizon Feng Tay is expected to generate 1.27 times less return on investment than Paiho Shih. But when comparing it to its historical volatility, Feng Tay Enterprises is 1.21 times less risky than Paiho Shih. It trades about 0.19 of its potential returns per unit of risk. Paiho Shih Holdings is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  2,620  in Paiho Shih Holdings on December 5, 2024 and sell it today you would earn a total of  245.00  from holding Paiho Shih Holdings or generate 9.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Feng Tay Enterprises  vs.  Paiho Shih Holdings

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 fairly stable basic indicators, Feng Tay is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Paiho Shih Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Paiho Shih Holdings 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 Tay and Paiho Shih

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

The idea behind Feng Tay Enterprises and Paiho Shih Holdings 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.