Correlation Between JUSUNG ENGINEERING and Finebesteel

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

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

Diversification Opportunities for JUSUNG ENGINEERING and Finebesteel

0.72

Correlation Coefficient

JUSUNG ENGINEERING  Finebesteel

Poor diversification

The 3 months correlation between JUSUNG and Finebesteel is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding JUSUNG ENGINEERING Co and Finebesteel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Finebesteel and JUSUNG ENGINEERING 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 JUSUNG ENGINEERING 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 JUSUNG ENGINEERING i.e., JUSUNG ENGINEERING and Finebesteel go up and down completely randomly.

Pair Corralation between JUSUNG ENGINEERING and Finebesteel

Assuming the 90 days trading horizon JUSUNG ENGINEERING Co is expected to generate 2.16 times more return on investment than Finebesteel. However, JUSUNG ENGINEERING is 2.16 times more volatile than Finebesteel. It trades about 0.02 of its potential returns per unit of risk. Finebesteel is currently generating about -0.26 per unit of risk. If you would invest  2,690,000  in JUSUNG ENGINEERING Co on July 1, 2024 and sell it today you would earn a total of  15,000  from holding JUSUNG ENGINEERING Co or generate 0.56% return on investment over 90 days.

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

JUSUNG ENGINEERING Co  vs.  Finebesteel

JUSUNG ENGINEERING

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JUSUNG ENGINEERING Co 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 October 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Finebesteel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Finebesteel 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 October 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with JUSUNG ENGINEERING and Finebesteel

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

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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.