Correlation Between EBEST Investment and Finetechnix CoLtd
Can any of the company-specific risk be diversified away by investing in both EBEST Investment and Finetechnix CoLtd 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 EBEST Investment and Finetechnix CoLtd into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EBEST Investment Securities and Finetechnix CoLtd, you can compare the effects of market volatilities on EBEST Investment and Finetechnix CoLtd 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 EBEST Investment with a short position of Finetechnix CoLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of EBEST Investment and Finetechnix CoLtd.
Diversification Opportunities for EBEST Investment and Finetechnix CoLtd
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between EBEST and Finetechnix is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding EBEST Investment Securities and Finetechnix CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Finetechnix CoLtd and EBEST Investment 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 EBEST Investment Securities are associated (or correlated) with Finetechnix CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Finetechnix CoLtd has no effect on the direction of EBEST Investment i.e., EBEST Investment and Finetechnix CoLtd go up and down completely randomly.
Pair Corralation between EBEST Investment and Finetechnix CoLtd
Assuming the 90 days trading horizon EBEST Investment Securities is expected to generate 0.72 times more return on investment than Finetechnix CoLtd. However, EBEST Investment Securities is 1.39 times less risky than Finetechnix CoLtd. It trades about -0.11 of its potential returns per unit of risk. Finetechnix CoLtd is currently generating about -0.12 per unit of risk. If you would invest 521,000 in EBEST Investment Securities on August 30, 2024 and sell it today you would lose (111,000) from holding EBEST Investment Securities or give up 21.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
EBEST Investment Securities vs. Finetechnix CoLtd
Performance |
| Timeline |
| EBEST Investment Sec |
| Finetechnix CoLtd |
EBEST Investment and Finetechnix CoLtd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EBEST Investment and Finetechnix CoLtd
The main advantage of trading using opposite EBEST Investment and Finetechnix CoLtd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EBEST Investment position performs unexpectedly, Finetechnix CoLtd 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 Finetechnix CoLtd will offset losses from the drop in Finetechnix CoLtd's long position.| EBEST Investment vs. Cube Entertainment | EBEST Investment vs. Dreamus Company | EBEST Investment vs. LG Energy Solution | EBEST Investment vs. Dongwon System |
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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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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