Correlation Between Finebesteel and Wing Yip
Can any of the company-specific risk be diversified away by investing in both Finebesteel and Wing Yip 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 Wing Yip into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Finebesteel and Wing Yip Food, you can compare the effects of market volatilities on Finebesteel and Wing Yip 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 Wing Yip. Check out your portfolio center. Please also check ongoing floating volatility patterns of Finebesteel and Wing Yip.
Diversification Opportunities for Finebesteel and Wing Yip
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Finebesteel and Wing is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Finebesteel and Wing Yip Food in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wing Yip Food 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 Wing Yip. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wing Yip Food has no effect on the direction of Finebesteel i.e., Finebesteel and Wing Yip go up and down completely randomly.
Pair Corralation between Finebesteel and Wing Yip
Assuming the 90 days trading horizon Finebesteel is expected to under-perform the Wing Yip. But the stock apears to be less risky and, when comparing its historical volatility, Finebesteel is 2.38 times less risky than Wing Yip. The stock trades about -0.01 of its potential returns per unit of risk. The Wing Yip Food is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 81,800 in Wing Yip Food on September 1, 2024 and sell it today you would earn a total of 129,200 from holding Wing Yip Food or generate 157.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Finebesteel vs. Wing Yip Food
Performance |
| Timeline |
| Finebesteel |
| Wing Yip Food |
Finebesteel and Wing Yip Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Finebesteel and Wing Yip
The main advantage of trading using opposite Finebesteel and Wing Yip positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Finebesteel position performs unexpectedly, Wing Yip 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 Wing Yip will offset losses from the drop in Wing Yip's long position.| Finebesteel vs. Samyang Foods Co | Finebesteel vs. Visang Education | Finebesteel vs. Sung Bo Chemicals | Finebesteel vs. Kukdong Oil Chemicals |
| Wing Yip vs. Maeil Dairies Co | Wing Yip vs. Busan Industrial Co | Wing Yip vs. Busan Ind | Wing Yip vs. Mirae Asset Daewoo |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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