Correlation Between FNSTech and Air Busan
Can any of the company-specific risk be diversified away by investing in both FNSTech and Air Busan 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 Air Busan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FNSTech Co and Air Busan Co, you can compare the effects of market volatilities on FNSTech and Air Busan 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 Air Busan. Check out your portfolio center. Please also check ongoing floating volatility patterns of FNSTech and Air Busan.
Diversification Opportunities for FNSTech and Air Busan
Poor diversification
The 3 months correlation between FNSTech and Air is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding FNSTech Co and Air Busan Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Busan 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 Air Busan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Busan has no effect on the direction of FNSTech i.e., FNSTech and Air Busan go up and down completely randomly.
Pair Corralation between FNSTech and Air Busan
Assuming the 90 days trading horizon FNSTech Co is expected to generate 2.09 times more return on investment than Air Busan. However, FNSTech is 2.09 times more volatile than Air Busan Co. It trades about -0.01 of its potential returns per unit of risk. Air Busan Co is currently generating about -0.03 per unit of risk. If you would invest 987,000 in FNSTech Co on October 18, 2024 and sell it today you would lose (71,000) from holding FNSTech Co or give up 7.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FNSTech Co vs. Air Busan Co
Performance |
| Timeline |
| FNSTech |
| Air Busan |
FNSTech and Air Busan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FNSTech and Air Busan
The main advantage of trading using opposite FNSTech and Air Busan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FNSTech position performs unexpectedly, Air Busan 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 Air Busan will offset losses from the drop in Air Busan's long position.| FNSTech vs. Jeju Beer Co | FNSTech vs. Innowireless Co | FNSTech vs. Korean Drug Co | FNSTech vs. Hanjoo Light Metal |
| Air Busan vs. Hwangkum Steel Technology | Air Busan vs. Finebesteel | Air Busan vs. FNSTech Co | Air Busan vs. Insun Environment New |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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