Correlation Between Busan Ind and Seohee Construction
Can any of the company-specific risk be diversified away by investing in both Busan Ind and Seohee Construction 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 Seohee Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Busan Ind and Seohee Construction Co, you can compare the effects of market volatilities on Busan Ind and Seohee Construction 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 Seohee Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Busan Ind and Seohee Construction.
Diversification Opportunities for Busan Ind and Seohee Construction
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Busan and Seohee is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Busan Ind and Seohee Construction Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seohee Construction 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 Seohee Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seohee Construction has no effect on the direction of Busan Ind i.e., Busan Ind and Seohee Construction go up and down completely randomly.
Pair Corralation between Busan Ind and Seohee Construction
Assuming the 90 days trading horizon Busan Ind is expected to generate 2.17 times less return on investment than Seohee Construction. In addition to that, Busan Ind is 1.78 times more volatile than Seohee Construction Co. It trades about 0.02 of its total potential returns per unit of risk. Seohee Construction Co is currently generating about 0.06 per unit of volatility. If you would invest 106,840 in Seohee Construction Co on September 14, 2024 and sell it today you would earn a total of 54,860 from holding Seohee Construction Co or generate 51.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Busan Ind vs. Seohee Construction Co
Performance |
| Timeline |
| Busan Ind |
| Seohee Construction |
Busan Ind and Seohee Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Busan Ind and Seohee Construction
The main advantage of trading using opposite Busan Ind and Seohee Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Busan Ind position performs unexpectedly, Seohee Construction 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 Seohee Construction will offset losses from the drop in Seohee Construction'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 |
| Seohee Construction vs. Korea New Network | Seohee Construction vs. Solution Advanced Technology | Seohee Construction vs. Busan Industrial Co | Seohee Construction 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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