Correlation Between Busan Ind and Shinsegae
Can any of the company-specific risk be diversified away by investing in both Busan Ind and Shinsegae 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 Busan Ind and Shinsegae into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Busan Ind and Shinsegae, you can compare the effects of market volatilities on Busan Ind and Shinsegae 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 Busan Ind with a short position of Shinsegae. Check out your portfolio center. Please also check ongoing floating volatility patterns of Busan Ind and Shinsegae.
Diversification Opportunities for Busan Ind and Shinsegae
Excellent diversification
The 3 months correlation between Busan and Shinsegae is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Busan Ind and Shinsegae in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinsegae and Busan Ind 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 Busan Ind are associated (or correlated) with Shinsegae. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shinsegae has no effect on the direction of Busan Ind i.e., Busan Ind and Shinsegae go up and down completely randomly.
Pair Corralation between Busan Ind and Shinsegae
Assuming the 90 days trading horizon Busan Ind is expected to generate 2.62 times more return on investment than Shinsegae. However, Busan Ind is 2.62 times more volatile than Shinsegae. It trades about 0.08 of its potential returns per unit of risk. Shinsegae is currently generating about -0.26 per unit of risk. If you would invest 5,280,000 in Busan Ind on August 29, 2024 and sell it today you would earn a total of 400,000 from holding Busan Ind or generate 7.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Busan Ind vs. Shinsegae
Performance |
| Timeline |
| Busan Ind |
| Shinsegae |
Busan Ind and Shinsegae Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Busan Ind and Shinsegae
The main advantage of trading using opposite Busan Ind and Shinsegae positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Busan Ind position performs unexpectedly, Shinsegae 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 Shinsegae will offset losses from the drop in Shinsegae's long position.| Busan Ind vs. PJ Metal Co | Busan Ind vs. Lotte Chilsung Beverage | Busan Ind vs. Sempio Foods Co | Busan Ind vs. Korean Reinsurance Co |
| Shinsegae vs. KMH Hitech Co | Shinsegae vs. GemVaxKAEL CoLtd | Shinsegae vs. Busan Industrial Co | Shinsegae vs. Busan Ind |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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