Correlation Between Fine Besteel and Jin Air
Can any of the company-specific risk be diversified away by investing in both Fine Besteel and Jin Air 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 Jin Air 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 Jin Air Co, you can compare the effects of market volatilities on Fine Besteel and Jin Air 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 Jin Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fine Besteel and Jin Air.
Diversification Opportunities for Fine Besteel and Jin Air
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Fine and Jin is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Fine Besteel Co and Jin Air Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jin Air 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 Jin Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jin Air has no effect on the direction of Fine Besteel i.e., Fine Besteel and Jin Air go up and down completely randomly.
Pair Corralation between Fine Besteel and Jin Air
Assuming the 90 days trading horizon Fine Besteel Co is expected to generate 1.87 times more return on investment than Jin Air. However, Fine Besteel is 1.87 times more volatile than Jin Air Co. It trades about 0.13 of its potential returns per unit of risk. Jin Air Co is currently generating about -0.09 per unit of risk. If you would invest 109,400 in Fine Besteel Co on November 25, 2024 and sell it today you would earn a total of 6,700 from holding Fine Besteel Co or generate 6.12% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Fine Besteel Co vs. Jin Air Co
Performance |
Timeline |
Fine Besteel |
Jin Air |
Fine Besteel and Jin Air Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Fine Besteel and Jin Air
The main advantage of trading using opposite Fine Besteel and Jin Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fine Besteel position performs unexpectedly, Jin Air 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 Jin Air will offset losses from the drop in Jin Air's long position.Fine Besteel vs. Dongil Metal Co | ||
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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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