Correlation Between Aprogen KIC and Finebesteel

Can any of the company-specific risk be diversified away by investing in both Aprogen KIC 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 Aprogen KIC and Finebesteel into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aprogen KIC and Finebesteel, you can compare the effects of market volatilities on Aprogen KIC 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 Aprogen KIC with a short position of Finebesteel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aprogen KIC and Finebesteel.

Diversification Opportunities for Aprogen KIC and Finebesteel

-0.59

Correlation Coefficient

Aprogen KIC  Finebesteel

Excellent diversification

The 3 months correlation between Aprogen and Finebesteel is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Aprogen KIC and Finebesteel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Finebesteel and Aprogen KIC 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 Aprogen KIC 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 Aprogen KIC i.e., Aprogen KIC and Finebesteel go up and down completely randomly.

Pair Corralation between Aprogen KIC and Finebesteel

Assuming the 90 days trading horizon Aprogen KIC is expected to under-perform the Finebesteel. In addition to that, Aprogen KIC is 2.05 times more volatile than Finebesteel. It trades about -0.25 of its total potential returns per unit of risk. Finebesteel is currently generating about -0.08 per unit of volatility. If you would invest  106,500  in Finebesteel on September 21, 2024 and sell it today you would lose (5,300) from holding Finebesteel or give up 4.98% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.65%
Values	Daily Returns

Aprogen KIC  vs.  Finebesteel

Aprogen KIC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aprogen KIC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Finebesteel

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Finebesteel are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Finebesteel sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aprogen KIC and Finebesteel

The main advantage of trading using opposite Aprogen KIC and Finebesteel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aprogen KIC 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.

The idea behind Aprogen KIC and Finebesteel pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Anywhere module to track or share privately all of your investments from the convenience of any device.