Correlation Between Fine Besteel and SBI Investment

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

By analyzing existing cross correlation between Fine Besteel Co and SBI Investment KOREA, you can compare the effects of market volatilities on Fine Besteel and SBI Investment 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 Fine Besteel with a short position of SBI Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fine Besteel and SBI Investment.

Diversification Opportunities for Fine Besteel and SBI Investment

-0.23

Correlation Coefficient

Fine Besteel  SBI Investment

Very good diversification

The 3 months correlation between Fine and SBI is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Fine Besteel Co and SBI Investment KOREA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SBI Investment KOREA and Fine Besteel 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 Fine Besteel Co are associated (or correlated) with SBI Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SBI Investment KOREA has no effect on the direction of Fine Besteel i.e., Fine Besteel and SBI Investment go up and down completely randomly.

Pair Corralation between Fine Besteel and SBI Investment

Assuming the 90 days trading horizon Fine Besteel Co is expected to generate 1.84 times more return on investment than SBI Investment. However, Fine Besteel is 1.84 times more volatile than SBI Investment KOREA. It trades about -0.04 of its potential returns per unit of risk. SBI Investment KOREA is currently generating about -0.12 per unit of risk. If you would invest  91,600  in Fine Besteel Co on December 30, 2024 and sell it today you would lose (9,900) from holding Fine Besteel Co or give up 10.81% of portfolio value over 90 days.

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

Fine Besteel Co  vs.  SBI Investment KOREA

Fine Besteel

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fine Besteel Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

SBI Investment KOREA

Risk-Adjusted Performance

Very Weak

Over the last 90 days SBI Investment KOREA 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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Fine Besteel and SBI Investment

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

The idea behind Fine Besteel Co and SBI Investment KOREA 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.