Correlation Between Settlebank and Finetechnix CoLtd
Can any of the company-specific risk be diversified away by investing in both Settlebank 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 Settlebank and Finetechnix CoLtd into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Settlebank and Finetechnix CoLtd, you can compare the effects of market volatilities on Settlebank 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 Settlebank with a short position of Finetechnix CoLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Settlebank and Finetechnix CoLtd.
Diversification Opportunities for Settlebank and Finetechnix CoLtd
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Settlebank and Finetechnix is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Settlebank and Finetechnix CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Finetechnix CoLtd and Settlebank 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 Settlebank 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 Settlebank i.e., Settlebank and Finetechnix CoLtd go up and down completely randomly.
Pair Corralation between Settlebank and Finetechnix CoLtd
Assuming the 90 days trading horizon Settlebank is expected to generate 1.68 times more return on investment than Finetechnix CoLtd. However, Settlebank is 1.68 times more volatile than Finetechnix CoLtd. It trades about -0.07 of its potential returns per unit of risk. Finetechnix CoLtd is currently generating about -0.45 per unit of risk. If you would invest 1,681,000 in Settlebank on September 12, 2024 and sell it today you would lose (228,000) from holding Settlebank or give up 13.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.31% |
| Values | Daily Returns |
Settlebank vs. Finetechnix CoLtd
Performance |
| Timeline |
| Settlebank |
| Finetechnix CoLtd |
Settlebank and Finetechnix CoLtd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Settlebank and Finetechnix CoLtd
The main advantage of trading using opposite Settlebank and Finetechnix CoLtd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Settlebank 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.| Settlebank vs. Daishin Information Communications | Settlebank vs. Solution Advanced Technology | Settlebank vs. Busan Industrial Co | Settlebank vs. Busan Ind |
| Finetechnix CoLtd vs. Daiyang Metal Co | Finetechnix CoLtd vs. Shinhan Inverse Silver | Finetechnix CoLtd vs. Digital Power Communications | Finetechnix CoLtd vs. Seoyon Topmetal Co |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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