Correlation Between Finebesteel and Hankukpackage

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

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

Diversification Opportunities for Finebesteel and Hankukpackage

-0.2

Correlation Coefficient

Finebesteel  Hankukpackage

Good diversification

The 3 months correlation between Finebesteel and Hankukpackage is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Finebesteel and Hankukpackage Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hankukpackage 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 Hankukpackage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hankukpackage has no effect on the direction of Finebesteel i.e., Finebesteel and Hankukpackage go up and down completely randomly.

Pair Corralation between Finebesteel and Hankukpackage

Assuming the 90 days trading horizon Finebesteel is expected to generate 2.94 times more return on investment than Hankukpackage. However, Finebesteel is 2.94 times more volatile than Hankukpackage Co. It trades about 0.13 of its potential returns per unit of risk. Hankukpackage Co is currently generating about -0.08 per unit of risk. If you would invest  83,600  in Finebesteel on September 6, 2024 and sell it today you would earn a total of  21,900  from holding Finebesteel or generate 26.2% return on investment over 90 days.

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

Finebesteel  vs.  Hankukpackage Co

Finebesteel

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Finebesteel are ranked lower than 10 (%) 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.

Hankukpackage

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Finebesteel and Hankukpackage

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

The idea behind Finebesteel and Hankukpackage Co 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.