Correlation Between Fine Besteel and KIM KINDEX

Can any of the company-specific risk be diversified away by investing in both Fine Besteel and KIM KINDEX 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 KIM KINDEX 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 KIM KINDEX 200TotalReturn, you can compare the effects of market volatilities on Fine Besteel and KIM KINDEX 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 KIM KINDEX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fine Besteel and KIM KINDEX.

Diversification Opportunities for Fine Besteel and KIM KINDEX

-0.53

Correlation Coefficient

Fine Besteel  KIM KINDEX

Excellent diversification

The 3 months correlation between Fine and KIM is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Fine Besteel Co and KIM KINDEX 200TotalReturn in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KIM KINDEX 200TotalReturn 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 KIM KINDEX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KIM KINDEX 200TotalReturn has no effect on the direction of Fine Besteel i.e., Fine Besteel and KIM KINDEX go up and down completely randomly.

Pair Corralation between Fine Besteel and KIM KINDEX

Assuming the 90 days trading horizon Fine Besteel Co is expected to under-perform the KIM KINDEX. In addition to that, Fine Besteel is 2.17 times more volatile than KIM KINDEX 200TotalReturn. It trades about -0.03 of its total potential returns per unit of risk. KIM KINDEX 200TotalReturn is currently generating about 0.01 per unit of volatility. If you would invest  2,077,500  in KIM KINDEX 200TotalReturn on October 8, 2024 and sell it today you would earn a total of  55,000  from holding KIM KINDEX 200TotalReturn or generate 2.65% return on investment over 90 days.

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

Fine Besteel Co  vs.  KIM KINDEX 200TotalReturn

Fine Besteel

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fine Besteel Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

KIM KINDEX 200TotalReturn

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KIM KINDEX 200TotalReturn has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, KIM KINDEX 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 KIM KINDEX

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

The idea behind Fine Besteel Co and KIM KINDEX 200TotalReturn 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.