Correlation Between Green Cross and Finebesteel
Can any of the company-specific risk be diversified away by investing in both Green Cross and Finebesteel 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 Green Cross and Finebesteel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Green Cross Medical and Finebesteel, you can compare the effects of market volatilities on Green Cross and Finebesteel 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 Green Cross with a short position of Finebesteel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Green Cross and Finebesteel.
Diversification Opportunities for Green Cross and Finebesteel
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Green and Finebesteel is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Green Cross Medical and Finebesteel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Finebesteel and Green Cross 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 Green Cross Medical are associated (or correlated) with Finebesteel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Finebesteel has no effect on the direction of Green Cross i.e., Green Cross and Finebesteel go up and down completely randomly.
Pair Corralation between Green Cross and Finebesteel
Assuming the 90 days trading horizon Green Cross is expected to generate 1.97 times less return on investment than Finebesteel. But when comparing it to its historical volatility, Green Cross Medical is 1.5 times less risky than Finebesteel. It trades about 0.12 of its potential returns per unit of risk. Finebesteel is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 106,500 in Finebesteel on November 27, 2024 and sell it today you would earn a total of 8,100 from holding Finebesteel or generate 7.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Green Cross Medical vs. Finebesteel
Performance |
| Timeline |
| Green Cross Medical |
| Finebesteel |
Green Cross and Finebesteel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Green Cross and Finebesteel
The main advantage of trading using opposite Green Cross and Finebesteel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Green Cross position performs unexpectedly, Finebesteel 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 Finebesteel will offset losses from the drop in Finebesteel's long position.| Green Cross vs. Iljin Materials Co | Green Cross vs. Hyosung Advanced Materials | Green Cross vs. National Plastic Co | Green Cross vs. LAKE MATERIALS LTD |
| Finebesteel vs. Sejong Industrial | Finebesteel vs. Korean Reinsurance Co | Finebesteel vs. Songwon Industrial Co | Finebesteel vs. Choil Aluminum |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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