Correlation Between China Feihe and Torque Lifestyle

Can any of the company-specific risk be diversified away by investing in both China Feihe and Torque Lifestyle 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 China Feihe and Torque Lifestyle into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between China Feihe Limited and Torque Lifestyle Brands, you can compare the effects of market volatilities on China Feihe and Torque Lifestyle 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 China Feihe with a short position of Torque Lifestyle. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Feihe and Torque Lifestyle.

Diversification Opportunities for China Feihe and Torque Lifestyle

-0.47

Correlation Coefficient

China Feihe  Torque Lifestyle

Very good diversification

The 3 months correlation between China and Torque is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding China Feihe Limited and Torque Lifestyle Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Torque Lifestyle Brands and China Feihe 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 China Feihe Limited are associated (or correlated) with Torque Lifestyle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Torque Lifestyle Brands has no effect on the direction of China Feihe i.e., China Feihe and Torque Lifestyle go up and down completely randomly.

Pair Corralation between China Feihe and Torque Lifestyle

Assuming the 90 days horizon China Feihe is expected to generate 1.24 times less return on investment than Torque Lifestyle. But when comparing it to its historical volatility, China Feihe Limited is 2.76 times less risky than Torque Lifestyle. It trades about 0.18 of its potential returns per unit of risk. Torque Lifestyle Brands is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  0.50  in Torque Lifestyle Brands on September 8, 2024 and sell it today you would lose (0.34) from holding Torque Lifestyle Brands or give up 68.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

China Feihe Limited  vs.  Torque Lifestyle Brands

China Feihe Limited

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in China Feihe Limited are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, China Feihe reported solid returns over the last few months and may actually be approaching a breakup point.

Torque Lifestyle Brands

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Torque Lifestyle Brands are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting essential indicators, Torque Lifestyle sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with China Feihe and Torque Lifestyle

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

The idea behind China Feihe Limited and Torque Lifestyle Brands 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.