Correlation Between FNSTech and ISU Chemical
Can any of the company-specific risk be diversified away by investing in both FNSTech and ISU Chemical 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 FNSTech and ISU Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FNSTech Co and ISU Chemical Co, you can compare the effects of market volatilities on FNSTech and ISU Chemical 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 FNSTech with a short position of ISU Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of FNSTech and ISU Chemical.
Diversification Opportunities for FNSTech and ISU Chemical
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between FNSTech and ISU is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding FNSTech Co and ISU Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ISU Chemical and FNSTech 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 FNSTech Co are associated (or correlated) with ISU Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ISU Chemical has no effect on the direction of FNSTech i.e., FNSTech and ISU Chemical go up and down completely randomly.
Pair Corralation between FNSTech and ISU Chemical
Assuming the 90 days trading horizon FNSTech Co is expected to generate 1.37 times more return on investment than ISU Chemical. However, FNSTech is 1.37 times more volatile than ISU Chemical Co. It trades about 0.34 of its potential returns per unit of risk. ISU Chemical Co is currently generating about 0.1 per unit of risk. If you would invest 810,000 in FNSTech Co on November 3, 2024 and sell it today you would earn a total of 244,000 from holding FNSTech Co or generate 30.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FNSTech Co vs. ISU Chemical Co
Performance |
| Timeline |
| FNSTech |
| ISU Chemical |
FNSTech and ISU Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FNSTech and ISU Chemical
The main advantage of trading using opposite FNSTech and ISU Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FNSTech position performs unexpectedly, ISU Chemical 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 ISU Chemical will offset losses from the drop in ISU Chemical's long position.| FNSTech vs. SK Chemicals Co | FNSTech vs. InnoTherapy | FNSTech vs. LG Chemicals | FNSTech vs. Echomarketing CoLtd |
| ISU Chemical vs. AptaBio Therapeutics | ISU Chemical vs. Daewoo SBI SPAC | ISU Chemical vs. Dream Security co | ISU Chemical vs. Microfriend |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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