Correlation Between Korea Steel and Busan Ind
Can any of the company-specific risk be diversified away by investing in both Korea Steel and Busan Ind 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 Korea Steel and Busan Ind into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea Steel Co and Busan Ind, you can compare the effects of market volatilities on Korea Steel and Busan Ind 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 Korea Steel with a short position of Busan Ind. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Steel and Busan Ind.
Diversification Opportunities for Korea Steel and Busan Ind
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Korea and Busan is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Korea Steel Co and Busan Ind in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Busan Ind and Korea Steel 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 Korea Steel Co are associated (or correlated) with Busan Ind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Busan Ind has no effect on the direction of Korea Steel i.e., Korea Steel and Busan Ind go up and down completely randomly.
Pair Corralation between Korea Steel and Busan Ind
Assuming the 90 days trading horizon Korea Steel Co is expected to generate 1.07 times more return on investment than Busan Ind. However, Korea Steel is 1.07 times more volatile than Busan Ind. It trades about 0.17 of its potential returns per unit of risk. Busan Ind is currently generating about -0.11 per unit of risk. If you would invest 165,300 in Korea Steel Co on December 11, 2024 and sell it today you would earn a total of 12,700 from holding Korea Steel Co or generate 7.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Steel Co vs. Busan Ind
Performance |
| Timeline |
| Korea Steel |
| Busan Ind |
Korea Steel and Busan Ind Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Steel and Busan Ind
The main advantage of trading using opposite Korea Steel and Busan Ind positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Steel position performs unexpectedly, Busan Ind 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 Ind will offset losses from the drop in Busan Ind's long position.| Korea Steel vs. Cube Entertainment | Korea Steel vs. Pan Entertainment Co | Korea Steel vs. MediaZen | Korea Steel vs. Korean Reinsurance Co |
| Busan Ind vs. Korean Drug Co | Busan Ind vs. TJ media Co | Busan Ind vs. Digital Multimedia Technology | Busan Ind vs. Aprogen Healthcare Games |
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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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