Correlation Between Moonbae Steel and Fantagio Corp

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

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

Diversification Opportunities for Moonbae Steel and Fantagio Corp

-0.06

Correlation Coefficient

Moonbae Steel  Fantagio Corp

Good diversification

The 3 months correlation between Moonbae and Fantagio is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Moonbae Steel and Fantagio Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fantagio Corp and Moonbae Steel 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 Moonbae Steel are associated (or correlated) with Fantagio Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fantagio Corp has no effect on the direction of Moonbae Steel i.e., Moonbae Steel and Fantagio Corp go up and down completely randomly.

Pair Corralation between Moonbae Steel and Fantagio Corp

Assuming the 90 days trading horizon Moonbae Steel is expected to generate 1.35 times more return on investment than Fantagio Corp. However, Moonbae Steel is 1.35 times more volatile than Fantagio Corp. It trades about 0.02 of its potential returns per unit of risk. Fantagio Corp is currently generating about -0.29 per unit of risk. If you would invest  228,000  in Moonbae Steel on October 24, 2024 and sell it today you would earn a total of  2,000  from holding Moonbae Steel or generate 0.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	88.71%
Values	Daily Returns

Moonbae Steel  vs.  Fantagio Corp

Moonbae Steel

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Moonbae Steel are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Moonbae Steel is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Fantagio Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fantagio Corp 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 February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Moonbae Steel and Fantagio Corp

The main advantage of trading using opposite Moonbae Steel and Fantagio Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Moonbae Steel position performs unexpectedly, Fantagio Corp 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 Fantagio Corp will offset losses from the drop in Fantagio Corp's long position.

The idea behind Moonbae Steel and Fantagio Corp 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.