Correlation Between FNSTech and Korea Petro
Can any of the company-specific risk be diversified away by investing in both FNSTech and Korea Petro 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 Korea Petro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FNSTech Co and Korea Petro Chemical, you can compare the effects of market volatilities on FNSTech and Korea Petro 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 Korea Petro. Check out your portfolio center. Please also check ongoing floating volatility patterns of FNSTech and Korea Petro.
Diversification Opportunities for FNSTech and Korea Petro
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between FNSTech and Korea is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding FNSTech Co and Korea Petro Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Petro 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 Korea Petro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Petro Chemical has no effect on the direction of FNSTech i.e., FNSTech and Korea Petro go up and down completely randomly.
Pair Corralation between FNSTech and Korea Petro
Assuming the 90 days trading horizon FNSTech Co is expected to generate 1.28 times more return on investment than Korea Petro. However, FNSTech is 1.28 times more volatile than Korea Petro Chemical. It trades about 0.02 of its potential returns per unit of risk. Korea Petro Chemical is currently generating about -0.01 per unit of risk. If you would invest 876,000 in FNSTech Co on October 16, 2024 and sell it today you would earn a total of 41,000 from holding FNSTech Co or generate 4.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 96.03% |
| Values | Daily Returns |
FNSTech Co vs. Korea Petro Chemical
Performance |
| Timeline |
| FNSTech |
| Korea Petro Chemical |
FNSTech and Korea Petro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FNSTech and Korea Petro
The main advantage of trading using opposite FNSTech and Korea Petro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FNSTech position performs unexpectedly, Korea Petro 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 Korea Petro will offset losses from the drop in Korea Petro's long position.| FNSTech vs. Lotte Chilsung Beverage | FNSTech vs. CKH Food Health | FNSTech vs. Heungkuk Metaltech CoLtd | FNSTech vs. Kbi Metal Co |
| Korea Petro vs. FNSTech Co | Korea Petro vs. Sungchang Autotech Co | Korea Petro vs. Hwangkum Steel Technology | Korea Petro vs. Lion Chemtech 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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