Correlation Between Kia Corp and Busan Industrial
Can any of the company-specific risk be diversified away by investing in both Kia Corp and Busan Industrial 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 Kia Corp and Busan Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kia Corp and Busan Industrial Co, you can compare the effects of market volatilities on Kia Corp and Busan Industrial 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 Kia Corp with a short position of Busan Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kia Corp and Busan Industrial.
Diversification Opportunities for Kia Corp and Busan Industrial
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Kia and Busan is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Kia Corp and Busan Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Busan Industrial and Kia Corp 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 Kia Corp are associated (or correlated) with Busan Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Busan Industrial has no effect on the direction of Kia Corp i.e., Kia Corp and Busan Industrial go up and down completely randomly.
Pair Corralation between Kia Corp and Busan Industrial
Assuming the 90 days trading horizon Kia Corp is expected to generate 0.53 times more return on investment than Busan Industrial. However, Kia Corp is 1.87 times less risky than Busan Industrial. It trades about -0.18 of its potential returns per unit of risk. Busan Industrial Co is currently generating about -0.1 per unit of risk. If you would invest 10,150,000 in Kia Corp on November 18, 2024 and sell it today you would lose (650,000) from holding Kia Corp or give up 6.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kia Corp vs. Busan Industrial Co
Performance |
| Timeline |
| Kia Corp |
| Busan Industrial |
Kia Corp and Busan Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kia Corp and Busan Industrial
The main advantage of trading using opposite Kia Corp and Busan Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kia Corp position performs unexpectedly, Busan Industrial 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 Busan Industrial will offset losses from the drop in Busan Industrial's long position.| Kia Corp vs. Eugene Technology CoLtd | Kia Corp vs. Seers Technology | Kia Corp vs. DONGKUK TED METAL | Kia Corp vs. Silicon2 Co |
| Busan Industrial vs. Samyung Trading Co | Busan Industrial vs. Namyang Dairy | Busan Industrial vs. Organic Special Pet | Busan Industrial vs. Samlip General Foods |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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