Correlation Between LS Materials and Finebesteel
Can any of the company-specific risk be diversified away by investing in both LS Materials 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 LS Materials and Finebesteel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LS Materials and Finebesteel, you can compare the effects of market volatilities on LS Materials 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 LS Materials with a short position of Finebesteel. Check out your portfolio center. Please also check ongoing floating volatility patterns of LS Materials and Finebesteel.
Diversification Opportunities for LS Materials and Finebesteel
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 417200 and Finebesteel is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding LS Materials and Finebesteel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Finebesteel and LS Materials 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 LS Materials 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 LS Materials i.e., LS Materials and Finebesteel go up and down completely randomly.
Pair Corralation between LS Materials and Finebesteel
Assuming the 90 days trading horizon LS Materials is expected to under-perform the Finebesteel. In addition to that, LS Materials is 1.15 times more volatile than Finebesteel. It trades about -0.03 of its total potential returns per unit of risk. Finebesteel is currently generating about 0.13 per unit of volatility. If you would invest 84,000 in Finebesteel on October 27, 2024 and sell it today you would earn a total of 25,400 from holding Finebesteel or generate 30.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LS Materials vs. Finebesteel
Performance |
| Timeline |
| LS Materials |
| Finebesteel |
LS Materials and Finebesteel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LS Materials and Finebesteel
The main advantage of trading using opposite LS Materials and Finebesteel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LS Materials 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.| LS Materials vs. Dongkuk Structures Construction | LS Materials vs. Dongwoo Farm To | LS Materials vs. Jeju Bank | LS Materials vs. Settlebank |
| Finebesteel vs. Dongkuk Structures Construction | Finebesteel vs. GS Engineering Construction | Finebesteel vs. Hyundai Home Shopping | Finebesteel vs. Korea Information Communications |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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