Correlation Between SV Investment and Finebesteel

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

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

Diversification Opportunities for SV Investment and Finebesteel

-0.58

Correlation Coefficient

SV Investment  Finebesteel

Excellent diversification

The 3 months correlation between 289080 and Finebesteel is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding SV Investment and Finebesteel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Finebesteel and SV Investment 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 SV Investment are associated (or correlated) with Finebesteel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Finebesteel has no effect on the direction of SV Investment i.e., SV Investment and Finebesteel go up and down completely randomly.

Pair Corralation between SV Investment and Finebesteel

Assuming the 90 days trading horizon SV Investment is expected to under-perform the Finebesteel. But the stock apears to be less risky and, when comparing its historical volatility, SV Investment is 1.05 times less risky than Finebesteel. The stock trades about -0.07 of its potential returns per unit of risk. The Finebesteel is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  129,200  in Finebesteel on October 12, 2024 and sell it today you would lose (34,600) from holding Finebesteel or give up 26.78% of portfolio value over 90 days.

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

SV Investment  vs.  Finebesteel

SV Investment

Risk-Adjusted Performance

0 of 100

Very Weak

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

Finebesteel

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Finebesteel are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Finebesteel may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with SV Investment and Finebesteel

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

The idea behind SV Investment and Finebesteel 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.