Correlation Between Busan Ind and Naver
Can any of the company-specific risk be diversified away by investing in both Busan Ind and Naver 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 Naver into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Busan Ind and Naver, you can compare the effects of market volatilities on Busan Ind and Naver 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 Naver. Check out your portfolio center. Please also check ongoing floating volatility patterns of Busan Ind and Naver.
Diversification Opportunities for Busan Ind and Naver
Very weak diversification
The 3 months correlation between Busan and Naver is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Busan Ind and Naver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Naver 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 Naver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Naver has no effect on the direction of Busan Ind i.e., Busan Ind and Naver go up and down completely randomly.
Pair Corralation between Busan Ind and Naver
Assuming the 90 days trading horizon Busan Ind is expected to generate 1.39 times less return on investment than Naver. In addition to that, Busan Ind is 3.08 times more volatile than Naver. It trades about 0.08 of its total potential returns per unit of risk. Naver is currently generating about 0.36 per unit of volatility. If you would invest 17,040,000 in Naver on August 29, 2024 and sell it today you would earn a total of 2,520,000 from holding Naver or generate 14.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Busan Ind vs. Naver
Performance |
| Timeline |
| Busan Ind |
| Naver |
Busan Ind and Naver Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Busan Ind and Naver
The main advantage of trading using opposite Busan Ind and Naver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Busan Ind position performs unexpectedly, Naver 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 Naver will offset losses from the drop in Naver's long position.| Busan Ind vs. PJ Metal Co | Busan Ind vs. Lotte Chilsung Beverage | Busan Ind vs. Sempio Foods Co | Busan Ind vs. Korean Reinsurance Co |
| Naver vs. Korea New Network | Naver vs. Busan Industrial Co | Naver vs. Busan Ind | Naver vs. Shinhan WTI Futures |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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