Correlation Between Humax and Fine Besteel
Can any of the company-specific risk be diversified away by investing in both Humax and Fine Besteel 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 Humax and Fine Besteel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Humax Co and Fine Besteel Co, you can compare the effects of market volatilities on Humax and Fine Besteel 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 Humax with a short position of Fine Besteel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Humax and Fine Besteel.
Diversification Opportunities for Humax and Fine Besteel
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Humax and Fine is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Humax Co and Fine Besteel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fine Besteel and Humax 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 Humax Co are associated (or correlated) with Fine Besteel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fine Besteel has no effect on the direction of Humax i.e., Humax and Fine Besteel go up and down completely randomly.
Pair Corralation between Humax and Fine Besteel
Assuming the 90 days trading horizon Humax Co is expected to under-perform the Fine Besteel. But the stock apears to be less risky and, when comparing its historical volatility, Humax Co is 1.21 times less risky than Fine Besteel. The stock trades about -0.15 of its potential returns per unit of risk. The Fine Besteel Co is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 176,000 in Fine Besteel Co on September 12, 2024 and sell it today you would lose (73,000) from holding Fine Besteel Co or give up 41.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Humax Co vs. Fine Besteel Co
Performance |
| Timeline |
| Humax |
| Fine Besteel |
Humax and Fine Besteel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Humax and Fine Besteel
The main advantage of trading using opposite Humax and Fine Besteel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Humax position performs unexpectedly, Fine Besteel 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 Fine Besteel will offset losses from the drop in Fine Besteel's long position.The idea behind Humax Co and Fine Besteel Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Fine Besteel vs. Samsung Electronics Co | Fine Besteel vs. Samsung Electronics Co | Fine Besteel vs. SK Hynix | Fine Besteel vs. POSCO Holdings |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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