Correlation Between Posco Chemical and Busan Industrial
Can any of the company-specific risk be diversified away by investing in both Posco Chemical 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 Posco Chemical and Busan Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Posco Chemical Co and Busan Industrial Co, you can compare the effects of market volatilities on Posco Chemical 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 Posco Chemical with a short position of Busan Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Posco Chemical and Busan Industrial.
Diversification Opportunities for Posco Chemical and Busan Industrial
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Posco and Busan is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Posco Chemical Co and Busan Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Busan Industrial and Posco Chemical 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 Posco Chemical Co 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 Posco Chemical i.e., Posco Chemical and Busan Industrial go up and down completely randomly.
Pair Corralation between Posco Chemical and Busan Industrial
Assuming the 90 days trading horizon Posco Chemical Co is expected to generate 1.43 times more return on investment than Busan Industrial. However, Posco Chemical is 1.43 times more volatile than Busan Industrial Co. It trades about 0.01 of its potential returns per unit of risk. Busan Industrial Co is currently generating about -0.01 per unit of risk. If you would invest 18,904,800 in Posco Chemical Co on September 2, 2024 and sell it today you would lose (1,674,800) from holding Posco Chemical Co or give up 8.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Posco Chemical Co vs. Busan Industrial Co
Performance |
| Timeline |
| Posco Chemical |
| Busan Industrial |
Posco Chemical and Busan Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Posco Chemical and Busan Industrial
The main advantage of trading using opposite Posco Chemical and Busan Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Posco Chemical 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.| Posco Chemical vs. Nam Hwa Construction | Posco Chemical vs. BGF Retail Co | Posco Chemical vs. Alton Sports CoLtd | Posco Chemical vs. Daekyung Machinery Engineering |
| Busan Industrial vs. AptaBio Therapeutics | Busan Industrial vs. Daewoo SBI SPAC | Busan Industrial vs. Dream Security co | Busan Industrial vs. Microfriend |
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.
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