Correlation Between Finebesteel and Korea Ratings
Can any of the company-specific risk be diversified away by investing in both Finebesteel and Korea Ratings 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 Korea Ratings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Finebesteel and Korea Ratings Co, you can compare the effects of market volatilities on Finebesteel and Korea Ratings 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 Korea Ratings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Finebesteel and Korea Ratings.
Diversification Opportunities for Finebesteel and Korea Ratings
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Finebesteel and Korea is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Finebesteel and Korea Ratings Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Ratings 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 Korea Ratings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Ratings has no effect on the direction of Finebesteel i.e., Finebesteel and Korea Ratings go up and down completely randomly.
Pair Corralation between Finebesteel and Korea Ratings
Assuming the 90 days trading horizon Finebesteel is expected to generate 3.25 times more return on investment than Korea Ratings. However, Finebesteel is 3.25 times more volatile than Korea Ratings Co. It trades about 0.07 of its potential returns per unit of risk. Korea Ratings Co is currently generating about 0.21 per unit of risk. If you would invest 97,000 in Finebesteel on September 14, 2024 and sell it today you would earn a total of 3,300 from holding Finebesteel or generate 3.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Finebesteel vs. Korea Ratings Co
Performance |
| Timeline |
| Finebesteel |
| Korea Ratings |
Finebesteel and Korea Ratings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Finebesteel and Korea Ratings
The main advantage of trading using opposite Finebesteel and Korea Ratings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Finebesteel position performs unexpectedly, Korea Ratings 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 Korea Ratings will offset losses from the drop in Korea Ratings' long position.| Finebesteel vs. Daewon Media Co | Finebesteel vs. Kbi Metal Co | Finebesteel vs. Seoyon Topmetal Co | Finebesteel vs. Kyeryong Construction Industrial |
| Korea Ratings vs. Haesung Industrial Co | Korea Ratings vs. Korean Drug Co | Korea Ratings vs. Seoyon Topmetal Co | Korea Ratings vs. Sewoon Medical 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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