Correlation Between Celltrion Pharm and Finebesteel

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

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

Diversification Opportunities for Celltrion Pharm and Finebesteel

-0.66

Correlation Coefficient

Celltrion Pharm  Finebesteel

Excellent diversification

The 3 months correlation between Celltrion and Finebesteel is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Celltrion Pharm and Finebesteel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Finebesteel and Celltrion Pharm 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 Celltrion Pharm 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 Celltrion Pharm i.e., Celltrion Pharm and Finebesteel go up and down completely randomly.

Pair Corralation between Celltrion Pharm and Finebesteel

Assuming the 90 days trading horizon Celltrion Pharm is expected to under-perform the Finebesteel. But the stock apears to be less risky and, when comparing its historical volatility, Celltrion Pharm is 1.11 times less risky than Finebesteel. The stock trades about -0.03 of its potential returns per unit of risk. The Finebesteel is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  87,100  in Finebesteel on October 22, 2024 and sell it today you would earn a total of  12,800  from holding Finebesteel or generate 14.7% return on investment over 90 days.

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

Celltrion Pharm  vs.  Finebesteel

Celltrion Pharm

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Celltrion Pharm 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.

Finebesteel

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Finebesteel are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Finebesteel sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Celltrion Pharm and Finebesteel

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

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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.