Correlation Between Busan Ind and Taegu Broadcasting
Can any of the company-specific risk be diversified away by investing in both Busan Ind and Taegu Broadcasting 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 Taegu Broadcasting into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Busan Ind and Taegu Broadcasting, you can compare the effects of market volatilities on Busan Ind and Taegu Broadcasting 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 Taegu Broadcasting. Check out your portfolio center. Please also check ongoing floating volatility patterns of Busan Ind and Taegu Broadcasting.
Diversification Opportunities for Busan Ind and Taegu Broadcasting
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Busan and Taegu is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Busan Ind and Taegu Broadcasting in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taegu Broadcasting 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 Taegu Broadcasting. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taegu Broadcasting has no effect on the direction of Busan Ind i.e., Busan Ind and Taegu Broadcasting go up and down completely randomly.
Pair Corralation between Busan Ind and Taegu Broadcasting
Assuming the 90 days trading horizon Busan Ind is expected to generate 1.25 times more return on investment than Taegu Broadcasting. However, Busan Ind is 1.25 times more volatile than Taegu Broadcasting. It trades about -0.09 of its potential returns per unit of risk. Taegu Broadcasting is currently generating about -0.14 per unit of risk. If you would invest 7,650,000 in Busan Ind on November 7, 2024 and sell it today you would lose (490,000) from holding Busan Ind or give up 6.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Busan Ind vs. Taegu Broadcasting
Performance |
| Timeline |
| Busan Ind |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
| Taegu Broadcasting |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Busan Ind and Taegu Broadcasting Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Busan Ind and Taegu Broadcasting
The main advantage of trading using opposite Busan Ind and Taegu Broadcasting positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Busan Ind position performs unexpectedly, Taegu Broadcasting 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 Taegu Broadcasting will offset losses from the drop in Taegu Broadcasting's long position.| Busan Ind vs. Seoul Semiconductor Co | Busan Ind vs. Vina Technology Co | Busan Ind vs. Jeju Bank | Busan Ind vs. Daou Technology |
| Taegu Broadcasting vs. Playgram Co | Taegu Broadcasting vs. INNOX Advanced Materials | Taegu Broadcasting vs. Vitzro Tech Co | Taegu Broadcasting vs. Korea Information Communications |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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