Correlation Between Busan Ind and Kbi Metal
Can any of the company-specific risk be diversified away by investing in both Busan Ind and Kbi Metal 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 Kbi Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Busan Ind and Kbi Metal Co, you can compare the effects of market volatilities on Busan Ind and Kbi Metal 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 Kbi Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Busan Ind and Kbi Metal.
Diversification Opportunities for Busan Ind and Kbi Metal
Excellent diversification
The 3 months correlation between Busan and Kbi is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Busan Ind and Kbi Metal Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kbi Metal 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 Kbi Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kbi Metal has no effect on the direction of Busan Ind i.e., Busan Ind and Kbi Metal go up and down completely randomly.
Pair Corralation between Busan Ind and Kbi Metal
Assuming the 90 days trading horizon Busan Ind is expected to under-perform the Kbi Metal. But the stock apears to be less risky and, when comparing its historical volatility, Busan Ind is 1.92 times less risky than Kbi Metal. The stock trades about -0.03 of its potential returns per unit of risk. The Kbi Metal Co is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 141,500 in Kbi Metal Co on August 24, 2024 and sell it today you would earn a total of 77,500 from holding Kbi Metal Co or generate 54.77% 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. Kbi Metal Co
Performance |
| Timeline |
| Busan Ind |
| Kbi Metal |
Busan Ind and Kbi Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Busan Ind and Kbi Metal
The main advantage of trading using opposite Busan Ind and Kbi Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Busan Ind position performs unexpectedly, Kbi Metal 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 Kbi Metal will offset losses from the drop in Kbi Metal's long position.| Busan Ind vs. Daekyung Machinery Engineering | Busan Ind vs. Shinsegae Engineering Construction | Busan Ind vs. RF Materials Co | Busan Ind vs. Top Material Co |
| Kbi Metal vs. Busan Industrial Co | Kbi Metal vs. Busan Ind | Kbi Metal vs. Mirae Asset Daewoo | Kbi Metal vs. UNISEM Co |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
Other Complementary Tools
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities |