Correlation Between Taewoong Logistics and Finebesteel

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

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

Diversification Opportunities for Taewoong Logistics and Finebesteel

-0.14

Correlation Coefficient

Taewoong Logistics  Finebesteel

Good diversification

The 3 months correlation between Taewoong and Finebesteel is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Taewoong Logistics CoLtd and Finebesteel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Finebesteel and Taewoong Logistics 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 Taewoong Logistics CoLtd 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 Taewoong Logistics i.e., Taewoong Logistics and Finebesteel go up and down completely randomly.

Pair Corralation between Taewoong Logistics and Finebesteel

Assuming the 90 days trading horizon Taewoong Logistics CoLtd is expected to under-perform the Finebesteel. In addition to that, Taewoong Logistics is 1.05 times more volatile than Finebesteel. It trades about -0.03 of its total potential returns per unit of risk. Finebesteel is currently generating about 0.1 per unit of volatility. If you would invest  85,300  in Finebesteel on September 21, 2024 and sell it today you would earn a total of  15,400  from holding Finebesteel or generate 18.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Taewoong Logistics CoLtd  vs.  Finebesteel

Taewoong Logistics CoLtd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Taewoong Logistics CoLtd 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.

Finebesteel

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Finebesteel are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Finebesteel sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Taewoong Logistics and Finebesteel

The main advantage of trading using opposite Taewoong Logistics and Finebesteel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taewoong Logistics 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 Taewoong Logistics CoLtd 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.