Correlation Between Fine Besteel and Sam Chun
Can any of the company-specific risk be diversified away by investing in both Fine Besteel and Sam Chun 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 Fine Besteel and Sam Chun into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fine Besteel Co and Sam Chun Dang, you can compare the effects of market volatilities on Fine Besteel and Sam Chun 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 Fine Besteel with a short position of Sam Chun. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fine Besteel and Sam Chun.
Diversification Opportunities for Fine Besteel and Sam Chun
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Fine and Sam is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Fine Besteel Co and Sam Chun Dang in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sam Chun Dang and Fine Besteel 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 Fine Besteel Co are associated (or correlated) with Sam Chun. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sam Chun Dang has no effect on the direction of Fine Besteel i.e., Fine Besteel and Sam Chun go up and down completely randomly.
Pair Corralation between Fine Besteel and Sam Chun
Assuming the 90 days trading horizon Fine Besteel Co is expected to under-perform the Sam Chun. But the stock apears to be less risky and, when comparing its historical volatility, Fine Besteel Co is 1.83 times less risky than Sam Chun. The stock trades about -0.05 of its potential returns per unit of risk. The Sam Chun Dang is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 5,820,000 in Sam Chun Dang on September 12, 2024 and sell it today you would earn a total of 3,980,000 from holding Sam Chun Dang or generate 68.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fine Besteel Co vs. Sam Chun Dang
Performance |
| Timeline |
| Fine Besteel |
| Sam Chun Dang |
Fine Besteel and Sam Chun Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fine Besteel and Sam Chun
The main advantage of trading using opposite Fine Besteel and Sam Chun positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fine Besteel position performs unexpectedly, Sam Chun 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 Sam Chun will offset losses from the drop in Sam Chun's long position.| Fine Besteel vs. Samsung Electronics Co | Fine Besteel vs. Samsung Electronics Co | Fine Besteel vs. SK Hynix | Fine Besteel vs. POSCO Holdings |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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