Correlation Between Wonil Special and Finebesteel

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

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

Diversification Opportunities for Wonil Special and Finebesteel

-0.39

Correlation Coefficient

Wonil Special  Finebesteel

Very good diversification

The 3 months correlation between Wonil and Finebesteel is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Wonil Special Steel and Finebesteel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Finebesteel and Wonil Special 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 Wonil Special Steel 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 Wonil Special i.e., Wonil Special and Finebesteel go up and down completely randomly.

Pair Corralation between Wonil Special and Finebesteel

Assuming the 90 days trading horizon Wonil Special Steel is expected to generate 0.44 times more return on investment than Finebesteel. However, Wonil Special Steel is 2.27 times less risky than Finebesteel. It trades about -0.03 of its potential returns per unit of risk. Finebesteel is currently generating about -0.04 per unit of risk. If you would invest  890,987  in Wonil Special Steel on October 11, 2024 and sell it today you would lose (162,987) from holding Wonil Special Steel or give up 18.29% of portfolio value over 90 days.

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

Wonil Special Steel  vs.  Finebesteel

Wonil Special Steel

Risk-Adjusted Performance

0 of 100

Very Weak

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

Finebesteel

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Finebesteel are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Finebesteel may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Wonil Special and Finebesteel

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

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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.