Correlation Between Busan Ind and Keyang Electric
Can any of the company-specific risk be diversified away by investing in both Busan Ind and Keyang Electric 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 Keyang Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Busan Ind and Keyang Electric Machinery, you can compare the effects of market volatilities on Busan Ind and Keyang Electric 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 Keyang Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Busan Ind and Keyang Electric.
Diversification Opportunities for Busan Ind and Keyang Electric
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Busan and Keyang is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Busan Ind and Keyang Electric Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keyang Electric Machinery 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 Keyang Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keyang Electric Machinery has no effect on the direction of Busan Ind i.e., Busan Ind and Keyang Electric go up and down completely randomly.
Pair Corralation between Busan Ind and Keyang Electric
Assuming the 90 days trading horizon Busan Ind is expected to generate 3.05 times more return on investment than Keyang Electric. However, Busan Ind is 3.05 times more volatile than Keyang Electric Machinery. It trades about 0.08 of its potential returns per unit of risk. Keyang Electric Machinery is currently generating about -0.06 per unit of risk. If you would invest 5,190,000 in Busan Ind on September 2, 2024 and sell it today you would earn a total of 950,000 from holding Busan Ind or generate 18.3% 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. Keyang Electric Machinery
Performance |
| Timeline |
| Busan Ind |
| Keyang Electric Machinery |
Busan Ind and Keyang Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Busan Ind and Keyang Electric
The main advantage of trading using opposite Busan Ind and Keyang Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Busan Ind position performs unexpectedly, Keyang Electric 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 Keyang Electric will offset losses from the drop in Keyang Electric's long position.| Busan Ind vs. Daelim Industrial Co | Busan Ind vs. Samhwa Paint Industrial | Busan Ind vs. Daesung Hi Tech Co | Busan Ind vs. Korea Computer |
| Keyang Electric vs. Busan Industrial Co | Keyang Electric vs. Busan Ind | Keyang Electric vs. Mirae Asset Daewoo | Keyang Electric vs. Finebesteel |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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