Correlation Between Ni Steel and Finebesteel
Can any of the company-specific risk be diversified away by investing in both Ni Steel and Finebesteel 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 Ni Steel and Finebesteel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ni Steel and Finebesteel, you can compare the effects of market volatilities on Ni Steel and Finebesteel 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 Ni Steel with a short position of Finebesteel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ni Steel and Finebesteel.
Diversification Opportunities for Ni Steel and Finebesteel
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 008260 and Finebesteel is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Ni Steel and Finebesteel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Finebesteel and Ni Steel 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 Ni Steel are associated (or correlated) with Finebesteel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Finebesteel has no effect on the direction of Ni Steel i.e., Ni Steel and Finebesteel go up and down completely randomly.
Pair Corralation between Ni Steel and Finebesteel
Assuming the 90 days trading horizon Ni Steel is expected to generate 6.92 times less return on investment than Finebesteel. But when comparing it to its historical volatility, Ni Steel is 1.4 times less risky than Finebesteel. It trades about 0.06 of its potential returns per unit of risk. Finebesteel is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 84,000 in Finebesteel on August 28, 2024 and sell it today you would earn a total of 29,000 from holding Finebesteel or generate 34.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ni Steel vs. Finebesteel
Performance |
| Timeline |
| Ni Steel |
| Finebesteel |
Ni Steel and Finebesteel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ni Steel and Finebesteel
The main advantage of trading using opposite Ni Steel and Finebesteel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ni Steel position performs unexpectedly, Finebesteel 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 Finebesteel will offset losses from the drop in Finebesteel's long position.The idea behind Ni Steel and Finebesteel 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.| Finebesteel vs. ABOV Semiconductor Co | Finebesteel vs. HJ ShipBuilding Construction | Finebesteel vs. SEOJEON ELECTRIC MACHINERY | Finebesteel vs. Seoul Semiconductor 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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