Correlation Between Finebesteel and National Plastic
Can any of the company-specific risk be diversified away by investing in both Finebesteel and National Plastic 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 Finebesteel and National Plastic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Finebesteel and National Plastic Co, you can compare the effects of market volatilities on Finebesteel and National Plastic 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 Finebesteel with a short position of National Plastic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Finebesteel and National Plastic.
Diversification Opportunities for Finebesteel and National Plastic
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Finebesteel and National is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Finebesteel and National Plastic Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Plastic and Finebesteel 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 Finebesteel are associated (or correlated) with National Plastic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Plastic has no effect on the direction of Finebesteel i.e., Finebesteel and National Plastic go up and down completely randomly.
Pair Corralation between Finebesteel and National Plastic
Assuming the 90 days trading horizon Finebesteel is expected to generate 3.09 times more return on investment than National Plastic. However, Finebesteel is 3.09 times more volatile than National Plastic Co. It trades about 0.29 of its potential returns per unit of risk. National Plastic Co is currently generating about -0.11 per unit of risk. If you would invest 84,000 in Finebesteel on August 29, 2024 and sell it today you would earn a total of 28,200 from holding Finebesteel or generate 33.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Finebesteel vs. National Plastic Co
Performance |
| Timeline |
| Finebesteel |
| National Plastic |
Finebesteel and National Plastic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Finebesteel and National Plastic
The main advantage of trading using opposite Finebesteel and National Plastic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Finebesteel position performs unexpectedly, National Plastic 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 National Plastic will offset losses from the drop in National Plastic's long position.| Finebesteel vs. Dong Il Steel | Finebesteel vs. Seah Steel Corp | Finebesteel vs. Ajusteel Co | Finebesteel vs. Ni Steel |
| National Plastic vs. Busan Industrial Co | National Plastic vs. Busan Ind | National Plastic vs. Shinhan WTI Futures | National Plastic vs. Finebesteel |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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