Correlation Between Busan Ind and Korea Shipbuilding
Can any of the company-specific risk be diversified away by investing in both Busan Ind and Korea Shipbuilding 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 Korea Shipbuilding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Busan Ind and Korea Shipbuilding Offshore, you can compare the effects of market volatilities on Busan Ind and Korea Shipbuilding 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 Korea Shipbuilding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Busan Ind and Korea Shipbuilding.
Diversification Opportunities for Busan Ind and Korea Shipbuilding
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Busan and Korea is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Busan Ind and Korea Shipbuilding Offshore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Shipbuilding 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 Korea Shipbuilding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Shipbuilding has no effect on the direction of Busan Ind i.e., Busan Ind and Korea Shipbuilding go up and down completely randomly.
Pair Corralation between Busan Ind and Korea Shipbuilding
Assuming the 90 days trading horizon Busan Ind is expected to generate 2.74 times more return on investment than Korea Shipbuilding. However, Busan Ind is 2.74 times more volatile than Korea Shipbuilding Offshore. It trades about 0.27 of its potential returns per unit of risk. Korea Shipbuilding Offshore is currently generating about 0.14 per unit of risk. If you would invest 5,680,000 in Busan Ind on September 15, 2024 and sell it today you would earn a total of 3,120,000 from holding Busan Ind or generate 54.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Busan Ind vs. Korea Shipbuilding Offshore
Performance |
| Timeline |
| Busan Ind |
| Korea Shipbuilding |
Busan Ind and Korea Shipbuilding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Busan Ind and Korea Shipbuilding
The main advantage of trading using opposite Busan Ind and Korea Shipbuilding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Busan Ind position performs unexpectedly, Korea Shipbuilding 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 Korea Shipbuilding will offset losses from the drop in Korea Shipbuilding'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 |
| Korea Shipbuilding vs. Korea New Network | Korea Shipbuilding vs. Solution Advanced Technology | Korea Shipbuilding vs. Busan Industrial Co | Korea Shipbuilding 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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