Correlation Between Finebesteel and Bosung Power

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

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

Diversification Opportunities for Finebesteel and Bosung Power

-0.5

Correlation Coefficient

Finebesteel  Bosung Power

Very good diversification

The 3 months correlation between Finebesteel and Bosung is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Finebesteel and Bosung Power Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bosung Power Technology and Finebesteel 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 Finebesteel are associated (or correlated) with Bosung Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bosung Power Technology has no effect on the direction of Finebesteel i.e., Finebesteel and Bosung Power go up and down completely randomly.

Pair Corralation between Finebesteel and Bosung Power

Assuming the 90 days trading horizon Finebesteel is expected to under-perform the Bosung Power. But the stock apears to be less risky and, when comparing its historical volatility, Finebesteel is 1.07 times less risky than Bosung Power. The stock trades about -0.04 of its potential returns per unit of risk. The Bosung Power Technology is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  401,000  in Bosung Power Technology on October 5, 2024 and sell it today you would lose (142,500) from holding Bosung Power Technology or give up 35.54% of portfolio value over 90 days.

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

Finebesteel  vs.  Bosung Power Technology

Finebesteel

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Finebesteel are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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.

Bosung Power Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bosung Power Technology 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 February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Finebesteel and Bosung Power

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

The idea behind Finebesteel and Bosung Power Technology 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 Stocks Directory module to find actively traded stocks across global markets.