Correlation Between Finebesteel and Ajusteel
Can any of the company-specific risk be diversified away by investing in both Finebesteel and Ajusteel 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 Ajusteel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Finebesteel and Ajusteel Co, you can compare the effects of market volatilities on Finebesteel and Ajusteel 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 Ajusteel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Finebesteel and Ajusteel.
Diversification Opportunities for Finebesteel and Ajusteel
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Finebesteel and Ajusteel is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Finebesteel and Ajusteel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ajusteel 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 Ajusteel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ajusteel has no effect on the direction of Finebesteel i.e., Finebesteel and Ajusteel go up and down completely randomly.
Pair Corralation between Finebesteel and Ajusteel
Assuming the 90 days trading horizon Finebesteel is expected to generate 1.19 times more return on investment than Ajusteel. However, Finebesteel is 1.19 times more volatile than Ajusteel Co. It trades about 0.02 of its potential returns per unit of risk. Ajusteel Co is currently generating about -0.09 per unit of risk. If you would invest 112,000 in Finebesteel on August 28, 2024 and sell it today you would earn a total of 1,000.00 from holding Finebesteel or generate 0.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Finebesteel vs. Ajusteel Co
Performance |
| Timeline |
| Finebesteel |
| Ajusteel |
Finebesteel and Ajusteel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Finebesteel and Ajusteel
The main advantage of trading using opposite Finebesteel and Ajusteel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Finebesteel position performs unexpectedly, Ajusteel 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 Ajusteel will offset losses from the drop in Ajusteel's long position.The idea behind Finebesteel and Ajusteel Co 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.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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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