Correlation Between Finebesteel and MiraeAsset TIGER

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

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

Diversification Opportunities for Finebesteel and MiraeAsset TIGER

0.34

Correlation Coefficient

Finebesteel  MiraeAsset TIGER

Weak diversification

The 3 months correlation between Finebesteel and MiraeAsset is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Finebesteel and MiraeAsset TIGER China in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MiraeAsset TIGER China 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 MiraeAsset TIGER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MiraeAsset TIGER China has no effect on the direction of Finebesteel i.e., Finebesteel and MiraeAsset TIGER go up and down completely randomly.

Pair Corralation between Finebesteel and MiraeAsset TIGER

Assuming the 90 days trading horizon Finebesteel is expected to under-perform the MiraeAsset TIGER. In addition to that, Finebesteel is 1.17 times more volatile than MiraeAsset TIGER China. It trades about -0.23 of its total potential returns per unit of risk. MiraeAsset TIGER China is currently generating about -0.16 per unit of volatility. If you would invest  947,000  in MiraeAsset TIGER China on October 8, 2024 and sell it today you would lose (44,000) from holding MiraeAsset TIGER China or give up 4.65% of portfolio value over 90 days.

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

Finebesteel  vs.  MiraeAsset TIGER China

Finebesteel

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Finebesteel are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Finebesteel is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

MiraeAsset TIGER China

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind Finebesteel and MiraeAsset TIGER China 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.

Check out your portfolio center.

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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.