Correlation Between Seoyon Topmetal and Finebesteel

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

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

Diversification Opportunities for Seoyon Topmetal and Finebesteel

0.59

Correlation Coefficient

Seoyon Topmetal  Finebesteel

Very weak diversification

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

Pair Corralation between Seoyon Topmetal and Finebesteel

Assuming the 90 days trading horizon Seoyon Topmetal Co is expected to generate 0.43 times more return on investment than Finebesteel. However, Seoyon Topmetal Co is 2.33 times less risky than Finebesteel. It trades about 0.13 of its potential returns per unit of risk. Finebesteel is currently generating about -0.02 per unit of risk. If you would invest  339,000  in Seoyon Topmetal Co on December 28, 2024 and sell it today you would earn a total of  34,000  from holding Seoyon Topmetal Co or generate 10.03% return on investment over 90 days.

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

Seoyon Topmetal Co  vs.  Finebesteel

Seoyon Topmetal

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Seoyon Topmetal Co are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Seoyon Topmetal may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Finebesteel

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Seoyon Topmetal and Finebesteel

The main advantage of trading using opposite Seoyon Topmetal and Finebesteel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seoyon Topmetal 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 Seoyon Topmetal Co 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.