Correlation Between Busan Ind and Dongsin Engineering
Can any of the company-specific risk be diversified away by investing in both Busan Ind and Dongsin 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 Dongsin 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 Dongsin Engineering Construction, you can compare the effects of market volatilities on Busan Ind and Dongsin 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 Dongsin Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Busan Ind and Dongsin Engineering.
Diversification Opportunities for Busan Ind and Dongsin Engineering
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Busan and Dongsin is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Busan Ind and Dongsin Engineering Constructi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongsin Engineering 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 Dongsin Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongsin Engineering has no effect on the direction of Busan Ind i.e., Busan Ind and Dongsin Engineering go up and down completely randomly.
Pair Corralation between Busan Ind and Dongsin Engineering
Assuming the 90 days trading horizon Busan Ind is expected to generate 0.76 times more return on investment than Dongsin Engineering. However, Busan Ind is 1.32 times less risky than Dongsin Engineering. It trades about 0.06 of its potential returns per unit of risk. Dongsin Engineering Construction is currently generating about -0.12 per unit of risk. If you would invest 5,280,000 in Busan Ind on August 27, 2024 and sell it today you would earn a total of 220,000 from holding Busan Ind or generate 4.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Busan Ind vs. Dongsin Engineering Constructi
Performance |
| Timeline |
| Busan Ind |
| Dongsin Engineering |
Busan Ind and Dongsin Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Busan Ind and Dongsin Engineering
The main advantage of trading using opposite Busan Ind and Dongsin Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Busan Ind position performs unexpectedly, Dongsin 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 Dongsin Engineering will offset losses from the drop in Dongsin Engineering'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 |
| Dongsin Engineering vs. ABOV Semiconductor Co | Dongsin Engineering vs. Kukdong Oil Chemicals | Dongsin Engineering vs. Dongnam Chemical Co | Dongsin Engineering vs. Daehan Synthetic Fiber |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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