Correlation Between Merida Industry and Feng Tay
Can any of the company-specific risk be diversified away by investing in both Merida Industry and Feng Tay 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 Merida Industry and Feng Tay into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Merida Industry Co and Feng Tay Enterprises, you can compare the effects of market volatilities on Merida Industry and Feng Tay 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 Merida Industry with a short position of Feng Tay. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merida Industry and Feng Tay.
Diversification Opportunities for Merida Industry and Feng Tay
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Merida and Feng is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Merida Industry Co and Feng Tay Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Feng Tay Enterprises and Merida Industry 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 Merida Industry Co are associated (or correlated) with Feng Tay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Feng Tay Enterprises has no effect on the direction of Merida Industry i.e., Merida Industry and Feng Tay go up and down completely randomly.
Pair Corralation between Merida Industry and Feng Tay
Assuming the 90 days trading horizon Merida Industry Co is expected to under-perform the Feng Tay. In addition to that, Merida Industry is 1.11 times more volatile than Feng Tay Enterprises. It trades about -0.18 of its total potential returns per unit of risk. Feng Tay Enterprises is currently generating about -0.01 per unit of volatility. If you would invest 14,000 in Feng Tay Enterprises on September 13, 2024 and sell it today you would lose (200.00) from holding Feng Tay Enterprises or give up 1.43% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 97.73% |
Values | Daily Returns |
Merida Industry Co vs. Feng Tay Enterprises
Performance |
Timeline |
Merida Industry |
Feng Tay Enterprises |
Merida Industry and Feng Tay Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Merida Industry and Feng Tay
The main advantage of trading using opposite Merida Industry and Feng Tay positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merida Industry position performs unexpectedly, Feng Tay 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 Tay will offset losses from the drop in Feng Tay's long position.Merida Industry vs. Giant Manufacturing Co | Merida Industry vs. Cheng Shin Rubber | Merida Industry vs. Feng Tay Enterprises | Merida Industry vs. President Chain Store |
Feng Tay vs. Pou Chen Corp | Feng Tay vs. Eclat Textile Co | Feng Tay vs. Hotai Motor Co | Feng Tay vs. Giant Manufacturing Co |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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