Correlation Between Finebesteel and DIGITAL CHOSUN
Can any of the company-specific risk be diversified away by investing in both Finebesteel and DIGITAL CHOSUN 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 DIGITAL CHOSUN into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Finebesteel and DIGITAL CHOSUN, you can compare the effects of market volatilities on Finebesteel and DIGITAL CHOSUN 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 DIGITAL CHOSUN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Finebesteel and DIGITAL CHOSUN.
Diversification Opportunities for Finebesteel and DIGITAL CHOSUN
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Finebesteel and DIGITAL is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Finebesteel and DIGITAL CHOSUN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DIGITAL CHOSUN 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 DIGITAL CHOSUN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DIGITAL CHOSUN has no effect on the direction of Finebesteel i.e., Finebesteel and DIGITAL CHOSUN go up and down completely randomly.
Pair Corralation between Finebesteel and DIGITAL CHOSUN
Assuming the 90 days trading horizon Finebesteel is expected to under-perform the DIGITAL CHOSUN. In addition to that, Finebesteel is 1.38 times more volatile than DIGITAL CHOSUN. It trades about -0.02 of its total potential returns per unit of risk. DIGITAL CHOSUN is currently generating about -0.01 per unit of volatility. If you would invest 214,453 in DIGITAL CHOSUN on December 11, 2024 and sell it today you would lose (39,253) from holding DIGITAL CHOSUN or give up 18.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Finebesteel vs. DIGITAL CHOSUN
Performance |
| Timeline |
| Finebesteel |
| DIGITAL CHOSUN |
Finebesteel and DIGITAL CHOSUN Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Finebesteel and DIGITAL CHOSUN
The main advantage of trading using opposite Finebesteel and DIGITAL CHOSUN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Finebesteel position performs unexpectedly, DIGITAL CHOSUN 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 DIGITAL CHOSUN will offset losses from the drop in DIGITAL CHOSUN's long position.| Finebesteel vs. DC Media Co | Finebesteel vs. SM Entertainment Co | Finebesteel vs. SEOJEON ELECTRIC MACHINERY | Finebesteel vs. Sungdo Engineering Construction |
| DIGITAL CHOSUN vs. Hotel Shilla Co | DIGITAL CHOSUN vs. LG Household Healthcare | DIGITAL CHOSUN vs. Hyundai Industrial Co | DIGITAL CHOSUN vs. Industrial Bank |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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