Correlation Between Fine Besteel and Lion Chemtech
Can any of the company-specific risk be diversified away by investing in both Fine Besteel and Lion Chemtech 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 Lion Chemtech 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 Lion Chemtech Co, you can compare the effects of market volatilities on Fine Besteel and Lion Chemtech 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 Lion Chemtech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fine Besteel and Lion Chemtech.
Diversification Opportunities for Fine Besteel and Lion Chemtech
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Fine and Lion is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Fine Besteel Co and Lion Chemtech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lion Chemtech 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 Lion Chemtech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lion Chemtech has no effect on the direction of Fine Besteel i.e., Fine Besteel and Lion Chemtech go up and down completely randomly.
Pair Corralation between Fine Besteel and Lion Chemtech
Assuming the 90 days trading horizon Fine Besteel Co is expected to generate 1.07 times more return on investment than Lion Chemtech. However, Fine Besteel is 1.07 times more volatile than Lion Chemtech Co. It trades about 0.02 of its potential returns per unit of risk. Lion Chemtech Co is currently generating about -0.03 per unit of risk. If you would invest 112,000 in Fine Besteel Co on August 28, 2024 and sell it today you would earn a total of 1,000.00 from holding Fine Besteel Co or generate 0.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fine Besteel Co vs. Lion Chemtech Co
Performance |
| Timeline |
| Fine Besteel |
| Lion Chemtech |
Fine Besteel and Lion Chemtech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fine Besteel and Lion Chemtech
The main advantage of trading using opposite Fine Besteel and Lion Chemtech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fine Besteel position performs unexpectedly, Lion Chemtech 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 Lion Chemtech will offset losses from the drop in Lion Chemtech's long position.| Fine Besteel vs. Raontech | Fine Besteel vs. Yura Tech Co | Fine Besteel vs. FNSTech Co | Fine Besteel vs. CU Tech Corp |
| Lion Chemtech vs. Moonbae Steel | Lion Chemtech vs. Fine Besteel Co | Lion Chemtech vs. J Steel Co | Lion Chemtech vs. DONGKUK STEEL MILL |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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