Correlation Between Fine Besteel and Nice Information

Can any of the company-specific risk be diversified away by investing in both Fine Besteel and Nice Information 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 Nice Information 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 Nice Information Telecommunication, you can compare the effects of market volatilities on Fine Besteel and Nice Information 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 Nice Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fine Besteel and Nice Information.

Diversification Opportunities for Fine Besteel and Nice Information

-0.38

Correlation Coefficient

Fine Besteel  Nice Information

Very good diversification

The 3 months correlation between Fine and Nice is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Fine Besteel Co and Nice Information Telecommunica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nice Information Tel 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 Nice Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nice Information Tel has no effect on the direction of Fine Besteel i.e., Fine Besteel and Nice Information go up and down completely randomly.

Pair Corralation between Fine Besteel and Nice Information

Assuming the 90 days trading horizon Fine Besteel Co is expected to generate 2.18 times more return on investment than Nice Information. However, Fine Besteel is 2.18 times more volatile than Nice Information Telecommunication. It trades about -0.01 of its potential returns per unit of risk. Nice Information Telecommunication is currently generating about -0.09 per unit of risk. If you would invest  113,000  in Fine Besteel Co on October 26, 2024 and sell it today you would lose (3,000) from holding Fine Besteel Co or give up 2.65% 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.  Nice Information Telecommunica

Fine Besteel

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fine Besteel Co are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Fine Besteel sustained solid returns over the last few months and may actually be approaching a breakup point.

Nice Information Tel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nice Information Telecommunication 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.

Pair Trading with Fine Besteel and Nice Information

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

The idea behind Fine Besteel Co and Nice Information Telecommunication 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.