Correlation Between Hironic Co and Finebesteel

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

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

Diversification Opportunities for Hironic Co and Finebesteel

-0.64

Correlation Coefficient

Hironic Co  Finebesteel

Excellent diversification

The 3 months correlation between Hironic and Finebesteel is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Hironic Co and Finebesteel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Finebesteel and Hironic Co 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 Hironic Co 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 Hironic Co i.e., Hironic Co and Finebesteel go up and down completely randomly.

Pair Corralation between Hironic Co and Finebesteel

Assuming the 90 days trading horizon Hironic Co is expected to under-perform the Finebesteel. In addition to that, Hironic Co is 1.11 times more volatile than Finebesteel. It trades about -0.02 of its total potential returns per unit of risk. Finebesteel is currently generating about 0.1 per unit of volatility. If you would invest  84,900  in Finebesteel on September 25, 2024 and sell it today you would earn a total of  15,300  from holding Finebesteel or generate 18.02% return on investment over 90 days.

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

Hironic Co  vs.  Finebesteel

Hironic Co

Risk-Adjusted Performance

0 of 100

Very Weak

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

The main advantage of trading using opposite Hironic Co and Finebesteel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hironic Co 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 Hironic Co 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.

Check out your portfolio center.

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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.