Correlation Between Busan Ind and Total Soft
Can any of the company-specific risk be diversified away by investing in both Busan Ind and Total Soft 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 Total Soft into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Busan Ind and Total Soft Bank, you can compare the effects of market volatilities on Busan Ind and Total Soft 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 Total Soft. Check out your portfolio center. Please also check ongoing floating volatility patterns of Busan Ind and Total Soft.
Diversification Opportunities for Busan Ind and Total Soft
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Busan and Total is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Busan Ind and Total Soft Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Total Soft Bank 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 Total Soft. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Total Soft Bank has no effect on the direction of Busan Ind i.e., Busan Ind and Total Soft go up and down completely randomly.
Pair Corralation between Busan Ind and Total Soft
Assuming the 90 days trading horizon Busan Ind is expected to generate 0.46 times more return on investment than Total Soft. However, Busan Ind is 2.16 times less risky than Total Soft. It trades about 0.16 of its potential returns per unit of risk. Total Soft Bank is currently generating about -0.22 per unit of risk. If you would invest 7,520,000 in Busan Ind on October 26, 2024 and sell it today you would earn a total of 410,000 from holding Busan Ind or generate 5.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Busan Ind vs. Total Soft Bank
Performance |
| Timeline |
| Busan Ind |
| Total Soft Bank |
Busan Ind and Total Soft Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Busan Ind and Total Soft
The main advantage of trading using opposite Busan Ind and Total Soft positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Busan Ind position performs unexpectedly, Total Soft 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 Total Soft will offset losses from the drop in Total Soft's long position.| Busan Ind vs. YG Entertainment | Busan Ind vs. Lotte Data Communication | Busan Ind vs. LG Household Healthcare | Busan Ind vs. Barunson Entertainment Arts |
| Total Soft vs. Busan Industrial Co | Total Soft vs. Busan Ind | Total Soft vs. RPBio Inc | Total Soft vs. Finebesteel |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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