Correlation Between Finebesteel and Wintec

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

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

Diversification Opportunities for Finebesteel and Wintec

0.06

Correlation Coefficient

Finebesteel  Wintec

Significant diversification

The 3 months correlation between Finebesteel and Wintec is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Finebesteel and Wintec Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wintec 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 Wintec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wintec has no effect on the direction of Finebesteel i.e., Finebesteel and Wintec go up and down completely randomly.

Pair Corralation between Finebesteel and Wintec

Assuming the 90 days trading horizon Finebesteel is expected to generate 0.66 times more return on investment than Wintec. However, Finebesteel is 1.52 times less risky than Wintec. It trades about 0.24 of its potential returns per unit of risk. Wintec Co is currently generating about 0.09 per unit of risk. If you would invest  100,200  in Finebesteel on October 24, 2024 and sell it today you would earn a total of  14,000  from holding Finebesteel or generate 13.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Finebesteel  vs.  Wintec Co

Finebesteel

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Finebesteel are ranked lower than 11 (%) 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.

Wintec

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wintec Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Wintec 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 Wintec

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

The idea behind Finebesteel and Wintec 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.