Correlation Between Feng Tay and Power Wind

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

Diversification Opportunities for Feng Tay and Power Wind

0.41

Correlation Coefficient

Feng Tay  Power Wind

Very weak diversification

The 3 months correlation between Feng and Power is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Feng Tay Enterprises and Power Wind Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power Wind Health 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 Power Wind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power Wind Health has no effect on the direction of Feng Tay i.e., Feng Tay and Power Wind go up and down completely randomly.

Pair Corralation between Feng Tay and Power Wind

Assuming the 90 days trading horizon Feng Tay Enterprises is expected to generate 1.92 times more return on investment than Power Wind. However, Feng Tay is 1.92 times more volatile than Power Wind Health. It trades about 0.05 of its potential returns per unit of risk. Power Wind Health is currently generating about 0.01 per unit of risk. If you would invest  13,100  in Feng Tay Enterprises on December 2, 2024 and sell it today you would earn a total of  700.00  from holding Feng Tay Enterprises or generate 5.34% return on investment over 90 days.

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

Feng Tay Enterprises  vs.  Power Wind Health

Feng Tay Enterprises

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Feng Tay Enterprises are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Feng Tay may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Power Wind Health

Risk-Adjusted Performance

Very Weak

Over the last 90 days Power Wind Health has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Power Wind 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 Feng Tay and Power Wind

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

The idea behind Feng Tay Enterprises and Power Wind Health 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.