Correlation Between FineMat Applied and CKM Building

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

By analyzing existing cross correlation between FineMat Applied Materials and CKM Building Material, you can compare the effects of market volatilities on FineMat Applied and CKM Building 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 FineMat Applied with a short position of CKM Building. Check out your portfolio center. Please also check ongoing floating volatility patterns of FineMat Applied and CKM Building.

Diversification Opportunities for FineMat Applied and CKM Building

-0.68

Correlation Coefficient

FineMat Applied  CKM Building

Excellent diversification

The 3 months correlation between FineMat and CKM is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding FineMat Applied Materials and CKM Building Material in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CKM Building Material and FineMat Applied 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 FineMat Applied Materials are associated (or correlated) with CKM Building. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CKM Building Material has no effect on the direction of FineMat Applied i.e., FineMat Applied and CKM Building go up and down completely randomly.

Pair Corralation between FineMat Applied and CKM Building

Assuming the 90 days trading horizon FineMat Applied Materials is expected to under-perform the CKM Building. In addition to that, FineMat Applied is 1.27 times more volatile than CKM Building Material. It trades about -0.06 of its total potential returns per unit of risk. CKM Building Material is currently generating about 0.27 per unit of volatility. If you would invest  3,475  in CKM Building Material on December 23, 2024 and sell it today you would earn a total of  740.00  from holding CKM Building Material or generate 21.29% return on investment over 90 days.

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

FineMat Applied Materials  vs.  CKM Building Material

FineMat Applied Materials

Risk-Adjusted Performance

Very Weak

Over the last 90 days FineMat Applied Materials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, FineMat Applied is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

CKM Building Material

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CKM Building Material are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, CKM Building showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with FineMat Applied and CKM Building

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

The idea behind FineMat Applied Materials and CKM Building Material 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.