Correlation Between Busan Ind and ISU Chemical
Can any of the company-specific risk be diversified away by investing in both Busan Ind and ISU Chemical 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 ISU Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Busan Ind and ISU Chemical Co, you can compare the effects of market volatilities on Busan Ind and ISU Chemical 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 ISU Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Busan Ind and ISU Chemical.
Diversification Opportunities for Busan Ind and ISU Chemical
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Busan and ISU is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Busan Ind and ISU Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ISU Chemical 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 ISU Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ISU Chemical has no effect on the direction of Busan Ind i.e., Busan Ind and ISU Chemical go up and down completely randomly.
Pair Corralation between Busan Ind and ISU Chemical
Assuming the 90 days trading horizon Busan Ind is expected to generate 2.05 times more return on investment than ISU Chemical. However, Busan Ind is 2.05 times more volatile than ISU Chemical Co. It trades about 0.17 of its potential returns per unit of risk. ISU Chemical Co is currently generating about -0.15 per unit of risk. If you would invest 6,080,000 in Busan Ind on September 12, 2024 and sell it today you would earn a total of 1,700,000 from holding Busan Ind or generate 27.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Busan Ind vs. ISU Chemical Co
Performance |
| Timeline |
| Busan Ind |
| ISU Chemical |
Busan Ind and ISU Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Busan Ind and ISU Chemical
The main advantage of trading using opposite Busan Ind and ISU Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Busan Ind position performs unexpectedly, ISU Chemical 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 ISU Chemical will offset losses from the drop in ISU Chemical's long position.| Busan Ind vs. Settlebank | Busan Ind vs. Jeju Bank | Busan Ind vs. Daejoo Electronic Materials | Busan Ind vs. InfoBank |
| ISU Chemical vs. Samsung Electronics Co | ISU Chemical vs. Samsung Electronics Co | ISU Chemical vs. SK Hynix | ISU Chemical vs. POSCO Holdings |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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