Correlation Between Finebesteel and Dongsin Engineering
Can any of the company-specific risk be diversified away by investing in both Finebesteel and Dongsin Engineering 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 Dongsin Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Finebesteel and Dongsin Engineering Construction, you can compare the effects of market volatilities on Finebesteel and Dongsin Engineering 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 Dongsin Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Finebesteel and Dongsin Engineering.
Diversification Opportunities for Finebesteel and Dongsin Engineering
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Finebesteel and Dongsin is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Finebesteel and Dongsin Engineering Constructi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongsin Engineering 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 Dongsin Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongsin Engineering has no effect on the direction of Finebesteel i.e., Finebesteel and Dongsin Engineering go up and down completely randomly.
Pair Corralation between Finebesteel and Dongsin Engineering
Assuming the 90 days trading horizon Finebesteel is expected to generate 0.52 times more return on investment than Dongsin Engineering. However, Finebesteel is 1.94 times less risky than Dongsin Engineering. It trades about 0.25 of its potential returns per unit of risk. Dongsin Engineering Construction is currently generating about -0.01 per unit of risk. If you would invest 83,900 in Finebesteel on August 30, 2024 and sell it today you would earn a total of 23,400 from holding Finebesteel or generate 27.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Finebesteel vs. Dongsin Engineering Constructi
Performance |
| Timeline |
| Finebesteel |
| Dongsin Engineering |
Finebesteel and Dongsin Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Finebesteel and Dongsin Engineering
The main advantage of trading using opposite Finebesteel and Dongsin Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Finebesteel position performs unexpectedly, Dongsin Engineering 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 Dongsin Engineering will offset losses from the drop in Dongsin Engineering's long position.The idea behind Finebesteel and Dongsin Engineering Construction 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.| Dongsin Engineering vs. Busan Industrial Co | Dongsin Engineering vs. Busan Ind | Dongsin Engineering vs. Shinhan WTI Futures | Dongsin Engineering 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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