Correlation Between Finetechnix CoLtd and Korea Computer

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

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

Diversification Opportunities for Finetechnix CoLtd and Korea Computer

-0.31

Correlation Coefficient

Finetechnix CoLtd  Korea Computer

Very good diversification

The 3 months correlation between Finetechnix and Korea is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Finetechnix CoLtd and Korea Computer Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Computer Systems and Finetechnix CoLtd 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 Finetechnix CoLtd are associated (or correlated) with Korea Computer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Computer Systems has no effect on the direction of Finetechnix CoLtd i.e., Finetechnix CoLtd and Korea Computer go up and down completely randomly.

Pair Corralation between Finetechnix CoLtd and Korea Computer

Assuming the 90 days trading horizon Finetechnix CoLtd is expected to generate 1.7 times more return on investment than Korea Computer. However, Finetechnix CoLtd is 1.7 times more volatile than Korea Computer Systems. It trades about 0.05 of its potential returns per unit of risk. Korea Computer Systems is currently generating about -0.06 per unit of risk. If you would invest  107,100  in Finetechnix CoLtd on December 30, 2024 and sell it today you would earn a total of  3,300  from holding Finetechnix CoLtd or generate 3.08% return on investment over 90 days.

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

Finetechnix CoLtd  vs.  Korea Computer Systems

Finetechnix CoLtd

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Finetechnix CoLtd are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Finetechnix CoLtd sustained solid returns over the last few months and may actually be approaching a breakup point.

Korea Computer Systems

Risk-Adjusted Performance

Very Weak

Over the last 90 days Korea Computer Systems has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Finetechnix CoLtd and Korea Computer

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

The idea behind Finetechnix CoLtd and Korea Computer Systems 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..