Correlation Between Heungkuk Metaltech and Fine Besteel

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

By analyzing existing cross correlation between Heungkuk Metaltech CoLtd and Fine Besteel Co, you can compare the effects of market volatilities on Heungkuk Metaltech and Fine Besteel 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 Heungkuk Metaltech with a short position of Fine Besteel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heungkuk Metaltech and Fine Besteel.

Diversification Opportunities for Heungkuk Metaltech and Fine Besteel

-0.07

Correlation Coefficient

Heungkuk Metaltech  Fine Besteel

Good diversification

The 3 months correlation between Heungkuk and Fine is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Heungkuk Metaltech CoLtd and Fine Besteel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fine Besteel and Heungkuk Metaltech 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 Heungkuk Metaltech CoLtd are associated (or correlated) with Fine Besteel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fine Besteel has no effect on the direction of Heungkuk Metaltech i.e., Heungkuk Metaltech and Fine Besteel go up and down completely randomly.

Pair Corralation between Heungkuk Metaltech and Fine Besteel

Assuming the 90 days trading horizon Heungkuk Metaltech CoLtd is expected to under-perform the Fine Besteel. But the stock apears to be less risky and, when comparing its historical volatility, Heungkuk Metaltech CoLtd is 1.9 times less risky than Fine Besteel. The stock trades about -0.02 of its potential returns per unit of risk. The Fine Besteel Co is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  98,500  in Fine Besteel Co on December 24, 2024 and sell it today you would earn a total of  1,900  from holding Fine Besteel Co or generate 1.93% return on investment over 90 days.

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

Heungkuk Metaltech CoLtd  vs.  Fine Besteel Co

Heungkuk Metaltech CoLtd

Risk-Adjusted Performance

Very Weak

Over the last 90 days Heungkuk Metaltech CoLtd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Heungkuk Metaltech is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Fine Besteel

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fine Besteel Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Fine Besteel is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Heungkuk Metaltech and Fine Besteel

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

The idea behind Heungkuk Metaltech CoLtd and Fine Besteel Co 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.