Correlation Between Busan Ind and Hanshin Construction
Can any of the company-specific risk be diversified away by investing in both Busan Ind and Hanshin Construction 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 Hanshin Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Busan Ind and Hanshin Construction Co, you can compare the effects of market volatilities on Busan Ind and Hanshin Construction 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 Hanshin Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Busan Ind and Hanshin Construction.
Diversification Opportunities for Busan Ind and Hanshin Construction
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Busan and Hanshin is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Busan Ind and Hanshin Construction Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanshin Construction 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 Hanshin Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanshin Construction has no effect on the direction of Busan Ind i.e., Busan Ind and Hanshin Construction go up and down completely randomly.
Pair Corralation between Busan Ind and Hanshin Construction
Assuming the 90 days trading horizon Busan Ind is expected to generate 3.61 times more return on investment than Hanshin Construction. However, Busan Ind is 3.61 times more volatile than Hanshin Construction Co. It trades about 0.21 of its potential returns per unit of risk. Hanshin Construction Co is currently generating about -0.08 per unit of risk. If you would invest 5,630,000 in Busan Ind on September 24, 2024 and sell it today you would earn a total of 2,120,000 from holding Busan Ind or generate 37.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Busan Ind vs. Hanshin Construction Co
Performance |
| Timeline |
| Busan Ind |
| Hanshin Construction |
Busan Ind and Hanshin Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Busan Ind and Hanshin Construction
The main advantage of trading using opposite Busan Ind and Hanshin Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Busan Ind position performs unexpectedly, Hanshin Construction 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 Hanshin Construction will offset losses from the drop in Hanshin Construction's long position.| Busan Ind vs. Samsung Electronics Co | Busan Ind vs. Samsung Electronics Co | Busan Ind vs. LG Energy Solution | Busan Ind vs. SK Hynix |
| Hanshin Construction vs. AptaBio Therapeutics | Hanshin Construction vs. Wonbang Tech Co | Hanshin Construction vs. Busan Industrial Co | Hanshin Construction 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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