Correlation Between Daewoo SBI and Finetechnix CoLtd
Can any of the company-specific risk be diversified away by investing in both Daewoo SBI and Finetechnix CoLtd 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 Daewoo SBI and Finetechnix CoLtd into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daewoo SBI SPAC and Finetechnix CoLtd, you can compare the effects of market volatilities on Daewoo SBI and Finetechnix CoLtd 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 Daewoo SBI with a short position of Finetechnix CoLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daewoo SBI and Finetechnix CoLtd.
Diversification Opportunities for Daewoo SBI and Finetechnix CoLtd
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Daewoo and Finetechnix is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Daewoo SBI SPAC and Finetechnix CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Finetechnix CoLtd and Daewoo SBI 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 Daewoo SBI SPAC are associated (or correlated) with Finetechnix CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Finetechnix CoLtd has no effect on the direction of Daewoo SBI i.e., Daewoo SBI and Finetechnix CoLtd go up and down completely randomly.
Pair Corralation between Daewoo SBI and Finetechnix CoLtd
Assuming the 90 days trading horizon Daewoo SBI SPAC is expected to generate 0.7 times more return on investment than Finetechnix CoLtd. However, Daewoo SBI SPAC is 1.42 times less risky than Finetechnix CoLtd. It trades about -0.06 of its potential returns per unit of risk. Finetechnix CoLtd is currently generating about -0.06 per unit of risk. If you would invest 449,000 in Daewoo SBI SPAC on September 2, 2024 and sell it today you would lose (213,000) from holding Daewoo SBI SPAC or give up 47.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daewoo SBI SPAC vs. Finetechnix CoLtd
Performance |
| Timeline |
| Daewoo SBI SPAC |
| Finetechnix CoLtd |
Daewoo SBI and Finetechnix CoLtd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daewoo SBI and Finetechnix CoLtd
The main advantage of trading using opposite Daewoo SBI and Finetechnix CoLtd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daewoo SBI position performs unexpectedly, Finetechnix CoLtd 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 Finetechnix CoLtd will offset losses from the drop in Finetechnix CoLtd's long position.| Daewoo SBI vs. Woori Technology Investment | Daewoo SBI vs. DB Financial Investment | Daewoo SBI vs. Hwangkum Steel Technology | Daewoo SBI vs. Orbitech 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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