Correlation Between Fine Besteel and AhnLab

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

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

Diversification Opportunities for Fine Besteel and AhnLab

0.83

Correlation Coefficient

Fine Besteel  AhnLab

Very poor diversification

The 3 months correlation between Fine and AhnLab is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Fine Besteel Co and AhnLab Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AhnLab Inc and Fine Besteel 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 Fine Besteel Co are associated (or correlated) with AhnLab. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AhnLab Inc has no effect on the direction of Fine Besteel i.e., Fine Besteel and AhnLab go up and down completely randomly.

Pair Corralation between Fine Besteel and AhnLab

Assuming the 90 days trading horizon Fine Besteel Co is expected to under-perform the AhnLab. But the stock apears to be less risky and, when comparing its historical volatility, Fine Besteel Co is 1.13 times less risky than AhnLab. The stock trades about -0.26 of its potential returns per unit of risk. The AhnLab Inc is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  5,420,000  in AhnLab Inc on July 1, 2024 and sell it today you would lose (40,000) from holding AhnLab Inc or give up 0.74% of portfolio value over 90 days.

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

Fine Besteel Co  vs.  AhnLab Inc

Fine Besteel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fine Besteel 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.

AhnLab Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AhnLab Inc 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.

Pair Trading with Fine Besteel and AhnLab

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

The idea behind Fine Besteel Co and AhnLab Inc 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.