Correlation Between Fecon Mining and Pha Lai

Can any of the company-specific risk be diversified away by investing in both Fecon Mining and Pha Lai 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 Fecon Mining and Pha Lai into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Fecon Mining JSC and Pha Lai Thermal, you can compare the effects of market volatilities on Fecon Mining and Pha Lai 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 Fecon Mining with a short position of Pha Lai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fecon Mining and Pha Lai.

Diversification Opportunities for Fecon Mining and Pha Lai

0.76

Correlation Coefficient

Fecon Mining  Pha Lai

Poor diversification

The 3 months correlation between Fecon and Pha is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Fecon Mining JSC and Pha Lai Thermal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pha Lai Thermal and Fecon Mining 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 Fecon Mining JSC are associated (or correlated) with Pha Lai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pha Lai Thermal has no effect on the direction of Fecon Mining i.e., Fecon Mining and Pha Lai go up and down completely randomly.

Pair Corralation between Fecon Mining and Pha Lai

Assuming the 90 days trading horizon Fecon Mining JSC is expected to generate 4.22 times more return on investment than Pha Lai. However, Fecon Mining is 4.22 times more volatile than Pha Lai Thermal. It trades about 0.03 of its potential returns per unit of risk. Pha Lai Thermal is currently generating about 0.08 per unit of risk. If you would invest  362,000  in Fecon Mining JSC on December 29, 2024 and sell it today you would earn a total of  12,000  from holding Fecon Mining JSC or generate 3.31% return on investment over 90 days.

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

Fecon Mining JSC  vs.  Pha Lai Thermal

Fecon Mining JSC

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fecon Mining JSC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, Fecon Mining may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pha Lai Thermal

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Pha Lai Thermal are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Pha Lai is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Fecon Mining and Pha Lai

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

The idea behind Fecon Mining JSC and Pha Lai Thermal 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.