Correlation Between Formetal and Cheryong Industrial
Can any of the company-specific risk be diversified away by investing in both Formetal and Cheryong Industrial 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 Formetal and Cheryong Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Formetal Co and Cheryong Industrial CoLtd, you can compare the effects of market volatilities on Formetal and Cheryong Industrial 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 Formetal with a short position of Cheryong Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Formetal and Cheryong Industrial.
Diversification Opportunities for Formetal and Cheryong Industrial
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Formetal and Cheryong is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Formetal Co and Cheryong Industrial CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cheryong Industrial CoLtd and Formetal 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 Formetal Co are associated (or correlated) with Cheryong Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cheryong Industrial CoLtd has no effect on the direction of Formetal i.e., Formetal and Cheryong Industrial go up and down completely randomly.
Pair Corralation between Formetal and Cheryong Industrial
Assuming the 90 days trading horizon Formetal Co is expected to generate 1.47 times more return on investment than Cheryong Industrial. However, Formetal is 1.47 times more volatile than Cheryong Industrial CoLtd. It trades about 0.13 of its potential returns per unit of risk. Cheryong Industrial CoLtd is currently generating about 0.16 per unit of risk. If you would invest 256,305 in Formetal Co on September 30, 2024 and sell it today you would earn a total of 34,695 from holding Formetal Co or generate 13.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Formetal Co vs. Cheryong Industrial CoLtd
Performance |
| Timeline |
| Formetal |
| Cheryong Industrial CoLtd |
Formetal and Cheryong Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Formetal and Cheryong Industrial
The main advantage of trading using opposite Formetal and Cheryong Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Formetal position performs unexpectedly, Cheryong Industrial 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 Cheryong Industrial will offset losses from the drop in Cheryong Industrial's long position.| Formetal vs. ECSTELECOM Co | Formetal vs. Dongbang Transport Logistics | Formetal vs. Hanjin Transportation Co | Formetal vs. KT Submarine Telecom |
| Cheryong Industrial vs. Lion Chemtech Co | Cheryong Industrial vs. Kuk Young GM | Cheryong Industrial vs. Nature and Environment |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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