Correlation Between Finebesteel and Daiyang Metal
Can any of the company-specific risk be diversified away by investing in both Finebesteel and Daiyang Metal 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 Daiyang Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Finebesteel and Daiyang Metal Co, you can compare the effects of market volatilities on Finebesteel and Daiyang Metal 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 Daiyang Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Finebesteel and Daiyang Metal.
Diversification Opportunities for Finebesteel and Daiyang Metal
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Finebesteel and Daiyang is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Finebesteel and Daiyang Metal Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daiyang Metal 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 Daiyang Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daiyang Metal has no effect on the direction of Finebesteel i.e., Finebesteel and Daiyang Metal go up and down completely randomly.
Pair Corralation between Finebesteel and Daiyang Metal
Assuming the 90 days trading horizon Finebesteel is expected to generate 1.35 times more return on investment than Daiyang Metal. However, Finebesteel is 1.35 times more volatile than Daiyang Metal Co. It trades about 0.3 of its potential returns per unit of risk. Daiyang Metal Co is currently generating about -0.03 per unit of risk. If you would invest 94,700 in Finebesteel on November 9, 2024 and sell it today you would earn a total of 17,300 from holding Finebesteel or generate 18.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Finebesteel vs. Daiyang Metal Co
Performance |
| Timeline |
| Finebesteel |
| Daiyang Metal |
Finebesteel and Daiyang Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Finebesteel and Daiyang Metal
The main advantage of trading using opposite Finebesteel and Daiyang Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Finebesteel position performs unexpectedly, Daiyang Metal 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 Daiyang Metal will offset losses from the drop in Daiyang Metal's long position.| Finebesteel vs. Alton Sports CoLtd | Finebesteel vs. iNtRON Biotechnology | Finebesteel vs. Display Tech Co | Finebesteel vs. Daou Technology |
| Daiyang Metal vs. PJ Electronics Co | Daiyang Metal vs. Daeduck Electronics Co | Daiyang Metal vs. PJ Metal Co | Daiyang Metal vs. SungMoon Electronics 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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