Correlation Between Dongbang Transport and Busan Industrial
Can any of the company-specific risk be diversified away by investing in both Dongbang Transport 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 Dongbang Transport and Busan Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dongbang Transport Logistics and Busan Industrial Co, you can compare the effects of market volatilities on Dongbang Transport 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 Dongbang Transport with a short position of Busan Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongbang Transport and Busan Industrial.
Diversification Opportunities for Dongbang Transport and Busan Industrial
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dongbang and Busan is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Dongbang Transport Logistics and Busan Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Busan Industrial and Dongbang Transport 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 Dongbang Transport Logistics 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 Dongbang Transport i.e., Dongbang Transport and Busan Industrial go up and down completely randomly.
Pair Corralation between Dongbang Transport and Busan Industrial
Assuming the 90 days trading horizon Dongbang Transport Logistics is expected to under-perform the Busan Industrial. But the stock apears to be less risky and, when comparing its historical volatility, Dongbang Transport Logistics is 3.77 times less risky than Busan Industrial. The stock trades about -0.03 of its potential returns per unit of risk. The Busan Industrial Co is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 5,600,000 in Busan Industrial Co on September 1, 2024 and sell it today you would earn a total of 540,000 from holding Busan Industrial Co or generate 9.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dongbang Transport Logistics vs. Busan Industrial Co
Performance |
| Timeline |
| Dongbang Transport |
| Busan Industrial |
Dongbang Transport and Busan Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongbang Transport and Busan Industrial
The main advantage of trading using opposite Dongbang Transport and Busan Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongbang Transport 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.| Dongbang Transport vs. Infinitt Healthcare Co | Dongbang Transport vs. LG Household Healthcare | Dongbang Transport vs. Cube Entertainment | Dongbang Transport vs. Digital Multimedia Technology |
| 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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