Correlation Between Fine Besteel and Poongsan
Can any of the company-specific risk be diversified away by investing in both Fine Besteel and Poongsan 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 Poongsan 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 Poongsan, you can compare the effects of market volatilities on Fine Besteel and Poongsan 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 Poongsan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fine Besteel and Poongsan.
Diversification Opportunities for Fine Besteel and Poongsan
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Fine and Poongsan is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Fine Besteel Co and Poongsan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Poongsan 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 Poongsan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Poongsan has no effect on the direction of Fine Besteel i.e., Fine Besteel and Poongsan go up and down completely randomly.
Pair Corralation between Fine Besteel and Poongsan
Assuming the 90 days trading horizon Fine Besteel Co is expected to generate 1.51 times more return on investment than Poongsan. However, Fine Besteel is 1.51 times more volatile than Poongsan. It trades about 0.21 of its potential returns per unit of risk. Poongsan is currently generating about 0.17 per unit of risk. If you would invest 98,500 in Fine Besteel Co on October 25, 2024 and sell it today you would earn a total of 12,100 from holding Fine Besteel Co or generate 12.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fine Besteel Co vs. Poongsan
Performance |
| Timeline |
| Fine Besteel |
| Poongsan |
Fine Besteel and Poongsan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fine Besteel and Poongsan
The main advantage of trading using opposite Fine Besteel and Poongsan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fine Besteel position performs unexpectedly, Poongsan 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 Poongsan will offset losses from the drop in Poongsan's long position.| Fine Besteel vs. KB Financial Group | Fine Besteel vs. Shinhan Financial Group | Fine Besteel vs. Hana Financial | Fine Besteel vs. Woori Financial Group |
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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