Correlation Between Busan Ind and KCC Engineering
Can any of the company-specific risk be diversified away by investing in both Busan Ind and KCC Engineering 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 KCC Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Busan Ind and KCC Engineering Construction, you can compare the effects of market volatilities on Busan Ind and KCC Engineering 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 KCC Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Busan Ind and KCC Engineering.
Diversification Opportunities for Busan Ind and KCC Engineering
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Busan and KCC is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Busan Ind and KCC Engineering Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KCC Engineering Cons 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 KCC Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KCC Engineering Cons has no effect on the direction of Busan Ind i.e., Busan Ind and KCC Engineering go up and down completely randomly.
Pair Corralation between Busan Ind and KCC Engineering
Assuming the 90 days trading horizon Busan Ind is expected to generate 2.55 times more return on investment than KCC Engineering. However, Busan Ind is 2.55 times more volatile than KCC Engineering Construction. It trades about 0.04 of its potential returns per unit of risk. KCC Engineering Construction is currently generating about -0.05 per unit of risk. If you would invest 6,245,000 in Busan Ind on September 14, 2024 and sell it today you would earn a total of 1,405,000 from holding Busan Ind or generate 22.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Busan Ind vs. KCC Engineering Construction
Performance |
| Timeline |
| Busan Ind |
| KCC Engineering Cons |
Busan Ind and KCC Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Busan Ind and KCC Engineering
The main advantage of trading using opposite Busan Ind and KCC Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Busan Ind position performs unexpectedly, KCC Engineering 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 KCC Engineering will offset losses from the drop in KCC Engineering'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 |
| KCC Engineering vs. Korea New Network | KCC Engineering vs. Solution Advanced Technology | KCC Engineering vs. Busan Industrial Co | KCC Engineering 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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