Correlation Between Finebesteel and Myoung Shin

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

By analyzing existing cross correlation between Finebesteel and Myoung Shin Industrial, you can compare the effects of market volatilities on Finebesteel and Myoung Shin 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 Myoung Shin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Finebesteel and Myoung Shin.

Diversification Opportunities for Finebesteel and Myoung Shin

-0.08

Correlation Coefficient

Finebesteel  Myoung Shin

Good diversification

The 3 months correlation between Finebesteel and Myoung is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Finebesteel and Myoung Shin Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Myoung Shin Industrial 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 Myoung Shin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Myoung Shin Industrial has no effect on the direction of Finebesteel i.e., Finebesteel and Myoung Shin go up and down completely randomly.

Pair Corralation between Finebesteel and Myoung Shin

Assuming the 90 days trading horizon Finebesteel is expected to generate 1.01 times more return on investment than Myoung Shin. However, Finebesteel is 1.01 times more volatile than Myoung Shin Industrial. It trades about 0.1 of its potential returns per unit of risk. Myoung Shin Industrial is currently generating about 0.07 per unit of risk. If you would invest  87,700  in Finebesteel on September 4, 2024 and sell it today you would earn a total of  16,800  from holding Finebesteel or generate 19.16% return on investment over 90 days.

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

Finebesteel  vs.  Myoung Shin Industrial

Finebesteel

Risk-Adjusted Performance

8 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Finebesteel are ranked lower than 8 (%) 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.

Myoung Shin Industrial

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Myoung Shin Industrial are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Myoung Shin sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Finebesteel and Myoung Shin

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

The idea behind Finebesteel and Myoung Shin Industrial 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.