Correlation Between Moonbae Steel and Insun Environment

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

By analyzing existing cross correlation between Moonbae Steel and Insun Environment New, you can compare the effects of market volatilities on Moonbae Steel and Insun Environment 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 Insun Environment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Moonbae Steel and Insun Environment.

Diversification Opportunities for Moonbae Steel and Insun Environment

-0.61

Correlation Coefficient

Moonbae Steel  Insun Environment

Excellent diversification

The 3 months correlation between Moonbae and Insun is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Moonbae Steel and Insun Environment New in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insun Environment New 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 Insun Environment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Insun Environment New has no effect on the direction of Moonbae Steel i.e., Moonbae Steel and Insun Environment go up and down completely randomly.

Pair Corralation between Moonbae Steel and Insun Environment

Assuming the 90 days trading horizon Moonbae Steel is expected to generate 1.98 times more return on investment than Insun Environment. However, Moonbae Steel is 1.98 times more volatile than Insun Environment New. It trades about 0.07 of its potential returns per unit of risk. Insun Environment New is currently generating about -0.11 per unit of risk. If you would invest  229,000  in Moonbae Steel on December 23, 2024 and sell it today you would earn a total of  23,500  from holding Moonbae Steel or generate 10.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Moonbae Steel  vs.  Insun Environment New

Moonbae Steel

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Moonbae Steel are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Moonbae Steel sustained solid returns over the last few months and may actually be approaching a breakup point.

Insun Environment New

Risk-Adjusted Performance

Very Weak

Over the last 90 days Insun Environment New has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Moonbae Steel and Insun Environment

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

The idea behind Moonbae Steel and Insun Environment New 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.

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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.