Correlation Between Busan Ind and Choil Aluminum
Can any of the company-specific risk be diversified away by investing in both Busan Ind and Choil Aluminum 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 Choil Aluminum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Busan Ind and Choil Aluminum, you can compare the effects of market volatilities on Busan Ind and Choil Aluminum 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 Choil Aluminum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Busan Ind and Choil Aluminum.
Diversification Opportunities for Busan Ind and Choil Aluminum
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Busan and Choil is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Busan Ind and Choil Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Choil Aluminum 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 Choil Aluminum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Choil Aluminum has no effect on the direction of Busan Ind i.e., Busan Ind and Choil Aluminum go up and down completely randomly.
Pair Corralation between Busan Ind and Choil Aluminum
Assuming the 90 days trading horizon Busan Ind is expected to generate 2.23 times more return on investment than Choil Aluminum. However, Busan Ind is 2.23 times more volatile than Choil Aluminum. It trades about 0.08 of its potential returns per unit of risk. Choil Aluminum is currently generating about -0.14 per unit of risk. If you would invest 5,280,000 in Busan Ind on August 28, 2024 and sell it today you would earn a total of 350,000 from holding Busan Ind or generate 6.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Busan Ind vs. Choil Aluminum
Performance |
| Timeline |
| Busan Ind |
| Choil Aluminum |
Busan Ind and Choil Aluminum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Busan Ind and Choil Aluminum
The main advantage of trading using opposite Busan Ind and Choil Aluminum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Busan Ind position performs unexpectedly, Choil Aluminum 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 Choil Aluminum will offset losses from the drop in Choil Aluminum's long position.| Busan Ind vs. Jinro Distillers Co | Busan Ind vs. Sam Yang Foods | Busan Ind vs. Daelim Industrial Co | Busan Ind vs. Haesung Industrial Co |
| Choil Aluminum vs. Hankuk Steel Wire | Choil Aluminum vs. Cuckoo Homesys Co | Choil Aluminum vs. Kukdong Oil Chemicals | Choil Aluminum vs. Hanil Iron Steel |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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