Correlation Between Finebesteel and JC Chemical

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

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

Diversification Opportunities for Finebesteel and JC Chemical

-0.48

Correlation Coefficient

Finebesteel  JC Chemical

Very good diversification

The 3 months correlation between Finebesteel and 137950 is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Finebesteel and JC Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JC Chemical 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 JC Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JC Chemical has no effect on the direction of Finebesteel i.e., Finebesteel and JC Chemical go up and down completely randomly.

Pair Corralation between Finebesteel and JC Chemical

Assuming the 90 days trading horizon Finebesteel is expected to generate 1.19 times more return on investment than JC Chemical. However, Finebesteel is 1.19 times more volatile than JC Chemical Co. It trades about 0.07 of its potential returns per unit of risk. JC Chemical Co is currently generating about 0.04 per unit of risk. If you would invest  101,200  in Finebesteel on December 1, 2024 and sell it today you would earn a total of  10,100  from holding Finebesteel or generate 9.98% return on investment over 90 days.

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

Finebesteel  vs.  JC Chemical Co

Finebesteel

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Finebesteel are ranked lower than 5 (%) 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.

JC Chemical

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in JC Chemical Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, JC Chemical 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 JC Chemical

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

The idea behind Finebesteel and JC Chemical 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.