Correlation Between Finebesteel and Settlebank
Can any of the company-specific risk be diversified away by investing in both Finebesteel and Settlebank 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 Settlebank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Finebesteel and Settlebank, you can compare the effects of market volatilities on Finebesteel and Settlebank 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 Settlebank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Finebesteel and Settlebank.
Diversification Opportunities for Finebesteel and Settlebank
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Finebesteel and Settlebank is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Finebesteel and Settlebank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Settlebank 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 Settlebank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Settlebank has no effect on the direction of Finebesteel i.e., Finebesteel and Settlebank go up and down completely randomly.
Pair Corralation between Finebesteel and Settlebank
Assuming the 90 days trading horizon Finebesteel is expected to under-perform the Settlebank. But the stock apears to be less risky and, when comparing its historical volatility, Finebesteel is 1.07 times less risky than Settlebank. The stock trades about -0.02 of its potential returns per unit of risk. The Settlebank is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 2,143,696 in Settlebank on November 19, 2024 and sell it today you would lose (724,696) from holding Settlebank or give up 33.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Finebesteel vs. Settlebank
Performance |
| Timeline |
| Finebesteel |
| Settlebank |
Finebesteel and Settlebank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Finebesteel and Settlebank
The main advantage of trading using opposite Finebesteel and Settlebank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Finebesteel position performs unexpectedly, Settlebank 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 Settlebank will offset losses from the drop in Settlebank's long position.| Finebesteel vs. Daou Data Corp | Finebesteel vs. Hankukpackage Co | Finebesteel vs. System and Application | Finebesteel vs. Jeong Moon Information |
| Settlebank vs. Shinhan Inverse Copper | Settlebank vs. Seoyon Topmetal Co | Settlebank vs. Haitai Confectionery Foods | Settlebank vs. Namyang Dairy |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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