Correlation Between Insung Information and Formetal
Can any of the company-specific risk be diversified away by investing in both Insung Information and Formetal 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 Insung Information and Formetal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Insung Information Co and Formetal Co, you can compare the effects of market volatilities on Insung Information and Formetal 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 Insung Information with a short position of Formetal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Insung Information and Formetal.
Diversification Opportunities for Insung Information and Formetal
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Insung and Formetal is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Insung Information Co and Formetal Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Formetal and Insung Information 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 Insung Information Co are associated (or correlated) with Formetal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Formetal has no effect on the direction of Insung Information i.e., Insung Information and Formetal go up and down completely randomly.
Pair Corralation between Insung Information and Formetal
Assuming the 90 days trading horizon Insung Information is expected to generate 4.54 times less return on investment than Formetal. But when comparing it to its historical volatility, Insung Information Co is 1.43 times less risky than Formetal. It trades about 0.07 of its potential returns per unit of risk. Formetal Co is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 267,500 in Formetal Co on September 14, 2024 and sell it today you would earn a total of 71,000 from holding Formetal Co or generate 26.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Insung Information Co vs. Formetal Co
Performance |
| Timeline |
| Insung Information |
| Formetal |
Insung Information and Formetal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Insung Information and Formetal
The main advantage of trading using opposite Insung Information and Formetal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Insung Information position performs unexpectedly, Formetal 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 Formetal will offset losses from the drop in Formetal's long position.| Insung Information vs. Phoenix Materials Co | Insung Information vs. WONIK Materials CoLtd | Insung Information vs. Shinhan Inverse Copper | Insung Information vs. MetaLabs Co |
| Formetal vs. Rainbow Robotics | Formetal vs. COWINTECH Co | Formetal vs. CS BEARING CoLtd | Formetal vs. Young Poong Precision |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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