Correlation Between Feng Tay and Bonny Worldwide

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

Diversification Opportunities for Feng Tay and Bonny Worldwide

0.69

Correlation Coefficient

Feng Tay  Bonny Worldwide

Poor diversification

The 3 months correlation between Feng and Bonny is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Feng Tay Enterprises and Bonny Worldwide in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bonny Worldwide 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 Bonny Worldwide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bonny Worldwide has no effect on the direction of Feng Tay i.e., Feng Tay and Bonny Worldwide go up and down completely randomly.

Pair Corralation between Feng Tay and Bonny Worldwide

Assuming the 90 days trading horizon Feng Tay is expected to generate 1.73 times less return on investment than Bonny Worldwide. But when comparing it to its historical volatility, Feng Tay Enterprises is 2.1 times less risky than Bonny Worldwide. It trades about 0.19 of its potential returns per unit of risk. Bonny Worldwide is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  23,800  in Bonny Worldwide on December 5, 2024 and sell it today you would earn a total of  2,750  from holding Bonny Worldwide or generate 11.55% return on investment over 90 days.

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

Feng Tay Enterprises  vs.  Bonny Worldwide

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.

Bonny Worldwide

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bonny Worldwide 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 Bonny Worldwide

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

The idea behind Feng Tay Enterprises and Bonny Worldwide 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..