Correlation Between Busan Ind and Korean Drug
Can any of the company-specific risk be diversified away by investing in both Busan Ind and Korean Drug 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 Korean Drug into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Busan Ind and Korean Drug Co, you can compare the effects of market volatilities on Busan Ind and Korean Drug 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 Korean Drug. Check out your portfolio center. Please also check ongoing floating volatility patterns of Busan Ind and Korean Drug.
Diversification Opportunities for Busan Ind and Korean Drug
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Busan and Korean is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Busan Ind and Korean Drug Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korean Drug 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 Korean Drug. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korean Drug has no effect on the direction of Busan Ind i.e., Busan Ind and Korean Drug go up and down completely randomly.
Pair Corralation between Busan Ind and Korean Drug
Assuming the 90 days trading horizon Busan Ind is expected to generate 1.76 times more return on investment than Korean Drug. However, Busan Ind is 1.76 times more volatile than Korean Drug Co. It trades about 0.02 of its potential returns per unit of risk. Korean Drug Co is currently generating about -0.07 per unit of risk. If you would invest 6,095,598 in Busan Ind on September 1, 2024 and sell it today you would earn a total of 44,402 from holding Busan Ind or generate 0.73% 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. Korean Drug Co
Performance |
| Timeline |
| Busan Ind |
| Korean Drug |
Busan Ind and Korean Drug Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Busan Ind and Korean Drug
The main advantage of trading using opposite Busan Ind and Korean Drug positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Busan Ind position performs unexpectedly, Korean Drug 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 Korean Drug will offset losses from the drop in Korean Drug's long position.| Busan Ind vs. ABCO Electronics Co | Busan Ind vs. KG Eco Technology | Busan Ind vs. PJ Electronics Co | Busan Ind vs. DAEDUCK ELECTRONICS CoLtd |
| Korean Drug vs. Digital Power Communications | Korean Drug vs. Grand Korea Leisure | Korean Drug vs. ITM Semiconductor Co | Korean Drug vs. Shinsegae Information Communication |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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