Correlation Between Fine Besteel and SEOWONINTECHCoLtd

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

Diversification Opportunities for Fine Besteel and SEOWONINTECHCoLtd

-0.31

Correlation Coefficient

Fine Besteel  SEOWONINTECHCoLtd

Very good diversification

The 3 months correlation between Fine and SEOWONINTECHCoLtd is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Fine Besteel Co and SEOWONINTECHCoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEOWONINTECHCoLtd 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 SEOWONINTECHCoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEOWONINTECHCoLtd has no effect on the direction of Fine Besteel i.e., Fine Besteel and SEOWONINTECHCoLtd go up and down completely randomly.

Pair Corralation between Fine Besteel and SEOWONINTECHCoLtd

Assuming the 90 days trading horizon Fine Besteel Co is expected to under-perform the SEOWONINTECHCoLtd. In addition to that, Fine Besteel is 5.54 times more volatile than SEOWONINTECHCoLtd. It trades about -0.02 of its total potential returns per unit of risk. SEOWONINTECHCoLtd is currently generating about -0.11 per unit of volatility. If you would invest  547,000  in SEOWONINTECHCoLtd on December 28, 2024 and sell it today you would lose (21,000) from holding SEOWONINTECHCoLtd or give up 3.84% 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.  SEOWONINTECHCoLtd

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 somewhat strong basic indicators, Fine Besteel is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

SEOWONINTECHCoLtd

Risk-Adjusted Performance

Very Weak

Over the last 90 days SEOWONINTECHCoLtd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, SEOWONINTECHCoLtd is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Fine Besteel and SEOWONINTECHCoLtd

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

The idea behind Fine Besteel Co and SEOWONINTECHCoLtd 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.