Correlation Between Solution Advanced and Finebesteel
Can any of the company-specific risk be diversified away by investing in both Solution Advanced 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 Solution Advanced and Finebesteel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Solution Advanced Technology and Finebesteel, you can compare the effects of market volatilities on Solution Advanced 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 Solution Advanced with a short position of Finebesteel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solution Advanced and Finebesteel.
Diversification Opportunities for Solution Advanced and Finebesteel
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Solution and Finebesteel is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Solution Advanced Technology and Finebesteel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Finebesteel and Solution Advanced 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 Solution Advanced Technology 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 Solution Advanced i.e., Solution Advanced and Finebesteel go up and down completely randomly.
Pair Corralation between Solution Advanced and Finebesteel
Assuming the 90 days trading horizon Solution Advanced Technology is expected to generate 1.23 times more return on investment than Finebesteel. However, Solution Advanced is 1.23 times more volatile than Finebesteel. It trades about -0.03 of its potential returns per unit of risk. Finebesteel is currently generating about -0.04 per unit of risk. If you would invest 312,683 in Solution Advanced Technology on September 4, 2024 and sell it today you would lose (160,083) from holding Solution Advanced Technology or give up 51.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Solution Advanced Technology vs. Finebesteel
Performance |
| Timeline |
| Solution Advanced |
| Finebesteel |
Solution Advanced and Finebesteel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solution Advanced and Finebesteel
The main advantage of trading using opposite Solution Advanced and Finebesteel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solution Advanced 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.| Solution Advanced vs. Samsung Electronics Co | Solution Advanced vs. Samsung Electronics Co | Solution Advanced vs. LG Energy Solution | Solution Advanced vs. SK Hynix |
| Finebesteel vs. Seah Steel Corp | Finebesteel vs. Ni Steel | Finebesteel vs. Korea Steel Co | Finebesteel vs. Bookook Steel |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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