Correlation Between Finebesteel and ALTEOGEN

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

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

Diversification Opportunities for Finebesteel and ALTEOGEN

-0.28

Correlation Coefficient

Finebesteel  ALTEOGEN

Very good diversification

The 3 months correlation between Finebesteel and ALTEOGEN is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Finebesteel and ALTEOGEN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALTEOGEN 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 ALTEOGEN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALTEOGEN has no effect on the direction of Finebesteel i.e., Finebesteel and ALTEOGEN go up and down completely randomly.

Pair Corralation between Finebesteel and ALTEOGEN

Assuming the 90 days trading horizon Finebesteel is expected to under-perform the ALTEOGEN. But the stock apears to be less risky and, when comparing its historical volatility, Finebesteel is 1.73 times less risky than ALTEOGEN. The stock trades about -0.04 of its potential returns per unit of risk. The ALTEOGEN is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  3,510,000  in ALTEOGEN on October 20, 2024 and sell it today you would earn a total of  27,240,000  from holding ALTEOGEN or generate 776.07% return on investment over 90 days.

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

Finebesteel  vs.  ALTEOGEN

Finebesteel

Risk-Adjusted Performance

5 of 100

Insignificant

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.

ALTEOGEN

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ALTEOGEN 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 ALTEOGEN

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

The idea behind Finebesteel and ALTEOGEN 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..