Correlation Between Jeju Bank and Busan Industrial
Can any of the company-specific risk be diversified away by investing in both Jeju Bank 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 Jeju Bank and Busan Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jeju Bank and Busan Industrial Co, you can compare the effects of market volatilities on Jeju Bank 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 Jeju Bank with a short position of Busan Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jeju Bank and Busan Industrial.
Diversification Opportunities for Jeju Bank and Busan Industrial
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Jeju and Busan is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Jeju Bank and Busan Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Busan Industrial and Jeju Bank 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 Jeju Bank 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 Jeju Bank i.e., Jeju Bank and Busan Industrial go up and down completely randomly.
Pair Corralation between Jeju Bank and Busan Industrial
Assuming the 90 days trading horizon Jeju Bank is expected to generate 0.61 times more return on investment than Busan Industrial. However, Jeju Bank is 1.64 times less risky than Busan Industrial. It trades about 0.24 of its potential returns per unit of risk. Busan Industrial Co is currently generating about 0.07 per unit of risk. If you would invest 732,000 in Jeju Bank on October 11, 2024 and sell it today you would earn a total of 97,000 from holding Jeju Bank or generate 13.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jeju Bank vs. Busan Industrial Co
Performance |
| Timeline |
| Jeju Bank |
| Busan Industrial |
Jeju Bank and Busan Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jeju Bank and Busan Industrial
The main advantage of trading using opposite Jeju Bank and Busan Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jeju Bank 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.| Jeju Bank vs. iNtRON Biotechnology | Jeju Bank vs. ENF Technology Co | Jeju Bank vs. KG Eco Technology | Jeju Bank vs. Vina Technology Co |
| Busan Industrial vs. LG Chemicals | Busan Industrial vs. Korean Reinsurance Co | Busan Industrial vs. Jeju Bank | Busan Industrial vs. Lotte Chilsung Beverage |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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