Correlation Between Finebesteel and InnoTherapy
Can any of the company-specific risk be diversified away by investing in both Finebesteel and InnoTherapy 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 InnoTherapy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Finebesteel and InnoTherapy, you can compare the effects of market volatilities on Finebesteel and InnoTherapy 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 InnoTherapy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Finebesteel and InnoTherapy.
Diversification Opportunities for Finebesteel and InnoTherapy
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Finebesteel and InnoTherapy is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Finebesteel and InnoTherapy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InnoTherapy 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 InnoTherapy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InnoTherapy has no effect on the direction of Finebesteel i.e., Finebesteel and InnoTherapy go up and down completely randomly.
Pair Corralation between Finebesteel and InnoTherapy
Assuming the 90 days trading horizon Finebesteel is expected to under-perform the InnoTherapy. In addition to that, Finebesteel is 1.1 times more volatile than InnoTherapy. It trades about -0.04 of its total potential returns per unit of risk. InnoTherapy is currently generating about 0.01 per unit of volatility. If you would invest 852,000 in InnoTherapy on August 28, 2024 and sell it today you would lose (4,000) from holding InnoTherapy or give up 0.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Finebesteel vs. InnoTherapy
Performance |
| Timeline |
| Finebesteel |
| InnoTherapy |
Finebesteel and InnoTherapy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Finebesteel and InnoTherapy
The main advantage of trading using opposite Finebesteel and InnoTherapy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Finebesteel position performs unexpectedly, InnoTherapy 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 InnoTherapy will offset losses from the drop in InnoTherapy's long position.| Finebesteel vs. ABOV Semiconductor Co | Finebesteel vs. HJ ShipBuilding Construction | Finebesteel vs. SEOJEON ELECTRIC MACHINERY | Finebesteel vs. Seoul Semiconductor Co |
| InnoTherapy vs. Kolon Life Science | InnoTherapy vs. Aminologics CoLtd | InnoTherapy vs. Withuspharmaceutical CoLtd | InnoTherapy vs. High Tech Pharm |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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