Correlation Between China Feihe and Toyo Suisan
Can any of the company-specific risk be diversified away by investing in both China Feihe and Toyo Suisan 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 Toyo Suisan 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 Toyo Suisan Kaisha, you can compare the effects of market volatilities on China Feihe and Toyo Suisan 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 Toyo Suisan. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Feihe and Toyo Suisan.
Diversification Opportunities for China Feihe and Toyo Suisan
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between China and Toyo is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding China Feihe Limited and Toyo Suisan Kaisha in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Toyo Suisan Kaisha 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 Toyo Suisan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Toyo Suisan Kaisha has no effect on the direction of China Feihe i.e., China Feihe and Toyo Suisan go up and down completely randomly.
Pair Corralation between China Feihe and Toyo Suisan
Assuming the 90 days horizon China Feihe Limited is expected to generate 0.15 times more return on investment than Toyo Suisan. However, China Feihe Limited is 6.75 times less risky than Toyo Suisan. It trades about 0.07 of its potential returns per unit of risk. Toyo Suisan Kaisha is currently generating about -0.08 per unit of risk. If you would invest 18.00 in China Feihe Limited on September 11, 2024 and sell it today you would earn a total of 52.00 from holding China Feihe Limited or generate 288.89% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 29.55% |
Values | Daily Returns |
China Feihe Limited vs. Toyo Suisan Kaisha
Performance |
Timeline |
China Feihe Limited |
Toyo Suisan Kaisha |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
China Feihe and Toyo Suisan Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with China Feihe and Toyo Suisan
The main advantage of trading using opposite China Feihe and Toyo Suisan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Feihe position performs unexpectedly, Toyo Suisan 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 Toyo Suisan will offset losses from the drop in Toyo Suisan's long position.China Feihe vs. WH Group Limited | China Feihe vs. BG Foods | China Feihe vs. JBS SA | China Feihe vs. Marfrig Global Foods |
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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 Transaction History module to view history of all your transactions and understand their impact on performance.
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