Correlation Between Busan Ind and KMH Hitech
Can any of the company-specific risk be diversified away by investing in both Busan Ind and KMH Hitech 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 KMH Hitech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Busan Ind and KMH Hitech Co, you can compare the effects of market volatilities on Busan Ind and KMH Hitech 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 KMH Hitech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Busan Ind and KMH Hitech.
Diversification Opportunities for Busan Ind and KMH Hitech
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Busan and KMH is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Busan Ind and KMH Hitech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KMH Hitech 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 KMH Hitech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KMH Hitech has no effect on the direction of Busan Ind i.e., Busan Ind and KMH Hitech go up and down completely randomly.
Pair Corralation between Busan Ind and KMH Hitech
Assuming the 90 days trading horizon Busan Ind is expected to generate 4.84 times less return on investment than KMH Hitech. In addition to that, Busan Ind is 1.9 times more volatile than KMH Hitech Co. It trades about 0.02 of its total potential returns per unit of risk. KMH Hitech Co is currently generating about 0.14 per unit of volatility. If you would invest 98,000 in KMH Hitech Co on November 27, 2024 and sell it today you would earn a total of 3,600 from holding KMH Hitech Co or generate 3.67% 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. KMH Hitech Co
Performance |
| Timeline |
| Busan Ind |
| KMH Hitech |
Busan Ind and KMH Hitech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Busan Ind and KMH Hitech
The main advantage of trading using opposite Busan Ind and KMH Hitech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Busan Ind position performs unexpectedly, KMH Hitech 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 KMH Hitech will offset losses from the drop in KMH Hitech's long position.| Busan Ind vs. Ssangyong Information Communication | Busan Ind vs. E Investment Development | Busan Ind vs. Stic Investments | Busan Ind vs. Korea Investment Holdings |
| KMH Hitech vs. Narae Nanotech Corp | KMH Hitech vs. Digital Multimedia Technology | KMH Hitech vs. MediaZen | KMH Hitech vs. ChipsMedia |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
Other Complementary Tools
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Positions Ratings 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 | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Content Syndication Quickly integrate customizable finance content to your own investment portal |