Correlation Between Fine Besteel and Automobile
Can any of the company-specific risk be diversified away by investing in both Fine Besteel and Automobile 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 Automobile 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 Automobile Pc, you can compare the effects of market volatilities on Fine Besteel and Automobile 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 Automobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fine Besteel and Automobile.
Diversification Opportunities for Fine Besteel and Automobile
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Fine and Automobile is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Fine Besteel Co and Automobile Pc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Automobile Pc 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 Automobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Automobile Pc has no effect on the direction of Fine Besteel i.e., Fine Besteel and Automobile go up and down completely randomly.
Pair Corralation between Fine Besteel and Automobile
Assuming the 90 days trading horizon Fine Besteel Co is expected to generate 1.4 times more return on investment than Automobile. However, Fine Besteel is 1.4 times more volatile than Automobile Pc. It trades about 0.3 of its potential returns per unit of risk. Automobile Pc is currently generating about -0.35 per unit of risk. If you would invest 94,700 in Fine Besteel Co on November 9, 2024 and sell it today you would earn a total of 17,300 from holding Fine Besteel Co or generate 18.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fine Besteel Co vs. Automobile Pc
Performance |
| Timeline |
| Fine Besteel |
| Automobile Pc |
Fine Besteel and Automobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fine Besteel and Automobile
The main advantage of trading using opposite Fine Besteel and Automobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fine Besteel position performs unexpectedly, Automobile 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 Automobile will offset losses from the drop in Automobile's long position.| Fine Besteel vs. Vina Technology Co | Fine Besteel vs. Digital Imaging Technology | Fine Besteel vs. HB Technology TD | Fine Besteel vs. Hannong Chemicals |
| Automobile vs. Daiyang Metal Co | Automobile vs. Dongbang Transport Logistics | Automobile vs. System and Application | Automobile vs. Daishin Information Communications |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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