Correlation Between Finebesteel and Kumho Petro
Can any of the company-specific risk be diversified away by investing in both Finebesteel and Kumho Petro 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 Kumho Petro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Finebesteel and Kumho Petro Chemical, you can compare the effects of market volatilities on Finebesteel and Kumho Petro 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 Kumho Petro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Finebesteel and Kumho Petro.
Diversification Opportunities for Finebesteel and Kumho Petro
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Finebesteel and Kumho is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Finebesteel and Kumho Petro Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kumho Petro Chemical 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 Kumho Petro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kumho Petro Chemical has no effect on the direction of Finebesteel i.e., Finebesteel and Kumho Petro go up and down completely randomly.
Pair Corralation between Finebesteel and Kumho Petro
Assuming the 90 days trading horizon Finebesteel is expected to generate 1.57 times more return on investment than Kumho Petro. However, Finebesteel is 1.57 times more volatile than Kumho Petro Chemical. It trades about 0.12 of its potential returns per unit of risk. Kumho Petro Chemical is currently generating about -0.12 per unit of risk. If you would invest 100,200 in Finebesteel on October 23, 2024 and sell it today you would earn a total of 5,200 from holding Finebesteel or generate 5.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Finebesteel vs. Kumho Petro Chemical
Performance |
| Timeline |
| Finebesteel |
| Kumho Petro Chemical |
Finebesteel and Kumho Petro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Finebesteel and Kumho Petro
The main advantage of trading using opposite Finebesteel and Kumho Petro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Finebesteel position performs unexpectedly, Kumho Petro 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 Kumho Petro will offset losses from the drop in Kumho Petro's long position.| Finebesteel vs. Daishin Information Communications | Finebesteel vs. PJ Metal Co | Finebesteel vs. Kbi Metal Co | Finebesteel vs. Ssangyong Information Communication |
| Kumho Petro vs. Hanjin Transportation Co | Kumho Petro vs. Atinum Investment Co | Kumho Petro vs. Taegu Broadcasting | Kumho Petro vs. Hanwha Life Insurance |
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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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