Correlation Between Finebesteel and Dongwoo Farm
Can any of the company-specific risk be diversified away by investing in both Finebesteel and Dongwoo Farm 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 Dongwoo Farm into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Finebesteel and Dongwoo Farm To, you can compare the effects of market volatilities on Finebesteel and Dongwoo Farm 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 Dongwoo Farm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Finebesteel and Dongwoo Farm.
Diversification Opportunities for Finebesteel and Dongwoo Farm
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Finebesteel and Dongwoo is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Finebesteel and Dongwoo Farm To in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongwoo Farm To 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 Dongwoo Farm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongwoo Farm To has no effect on the direction of Finebesteel i.e., Finebesteel and Dongwoo Farm go up and down completely randomly.
Pair Corralation between Finebesteel and Dongwoo Farm
Assuming the 90 days trading horizon Finebesteel is expected to generate 3.61 times more return on investment than Dongwoo Farm. However, Finebesteel is 3.61 times more volatile than Dongwoo Farm To. It trades about 0.16 of its potential returns per unit of risk. Dongwoo Farm To is currently generating about 0.22 per unit of risk. If you would invest 106,500 in Finebesteel on November 27, 2024 and sell it today you would earn a total of 8,100 from holding Finebesteel or generate 7.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Finebesteel vs. Dongwoo Farm To
Performance |
| Timeline |
| Finebesteel |
| Dongwoo Farm To |
Finebesteel and Dongwoo Farm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Finebesteel and Dongwoo Farm
The main advantage of trading using opposite Finebesteel and Dongwoo Farm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Finebesteel position performs unexpectedly, Dongwoo Farm 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 Dongwoo Farm will offset losses from the drop in Dongwoo Farm's long position.| Finebesteel vs. Sejong Industrial | Finebesteel vs. Korean Reinsurance Co | Finebesteel vs. Songwon Industrial Co | Finebesteel vs. Choil Aluminum |
| Dongwoo Farm vs. Maeil Dairies Co | Dongwoo Farm vs. HYUNDAI FEED | Dongwoo Farm vs. Neo Cremar Co | Dongwoo Farm vs. Wing Yip Food |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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