Correlation Between Seoul Food and Busan Industrial
Can any of the company-specific risk be diversified away by investing in both Seoul Food 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 Seoul Food and Busan Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Seoul Food Industrial and Busan Industrial Co, you can compare the effects of market volatilities on Seoul Food 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 Seoul Food with a short position of Busan Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seoul Food and Busan Industrial.
Diversification Opportunities for Seoul Food and Busan Industrial
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Seoul and Busan is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Seoul Food Industrial and Busan Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Busan Industrial and Seoul Food 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 Seoul Food Industrial 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 Seoul Food i.e., Seoul Food and Busan Industrial go up and down completely randomly.
Pair Corralation between Seoul Food and Busan Industrial
Assuming the 90 days trading horizon Seoul Food Industrial is expected to under-perform the Busan Industrial. But the stock apears to be less risky and, when comparing its historical volatility, Seoul Food Industrial is 1.79 times less risky than Busan Industrial. The stock trades about -0.04 of its potential returns per unit of risk. The Busan Industrial Co is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 8,199,495 in Busan Industrial Co on August 29, 2024 and sell it today you would lose (2,519,495) from holding Busan Industrial Co or give up 30.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Seoul Food Industrial vs. Busan Industrial Co
Performance |
| Timeline |
| Seoul Food Industrial |
| Busan Industrial |
Seoul Food and Busan Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seoul Food and Busan Industrial
The main advantage of trading using opposite Seoul Food and Busan Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seoul Food 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.| Seoul Food vs. Kbi Metal Co | Seoul Food vs. SBI Investment KOREA | Seoul Food vs. MetaLabs Co | Seoul Food vs. Cheryong Industrial CoLtd |
| Busan Industrial vs. Sangsin Energy Display | Busan Industrial vs. Inzi Display CoLtd | Busan Industrial vs. Top Material Co | Busan Industrial vs. Ssangyong Materials Corp |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
Other Complementary Tools
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Stocks Directory Find actively traded stocks across global markets | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon |