Correlation Between Busan Ind and Korea Investment
Can any of the company-specific risk be diversified away by investing in both Busan Ind and Korea Investment 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 Korea Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Busan Ind and Korea Investment Holdings, you can compare the effects of market volatilities on Busan Ind and Korea Investment 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 Korea Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Busan Ind and Korea Investment.
Diversification Opportunities for Busan Ind and Korea Investment
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Busan and Korea is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Busan Ind and Korea Investment Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Investment Holdings 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 Korea Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Investment Holdings has no effect on the direction of Busan Ind i.e., Busan Ind and Korea Investment go up and down completely randomly.
Pair Corralation between Busan Ind and Korea Investment
Assuming the 90 days trading horizon Busan Ind is expected to under-perform the Korea Investment. In addition to that, Busan Ind is 1.32 times more volatile than Korea Investment Holdings. It trades about -0.07 of its total potential returns per unit of risk. Korea Investment Holdings is currently generating about 0.13 per unit of volatility. If you would invest 5,201,618 in Korea Investment Holdings on December 10, 2024 and sell it today you would earn a total of 218,382 from holding Korea Investment Holdings or generate 4.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Busan Ind vs. Korea Investment Holdings
Performance |
| Timeline |
| Busan Ind |
| Korea Investment Holdings |
Busan Ind and Korea Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Busan Ind and Korea Investment
The main advantage of trading using opposite Busan Ind and Korea Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Busan Ind position performs unexpectedly, Korea Investment 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 Korea Investment will offset losses from the drop in Korea Investment's long position.| Busan Ind vs. Korean Drug Co | Busan Ind vs. TJ media Co | Busan Ind vs. Digital Multimedia Technology | Busan Ind vs. Aprogen Healthcare Games |
| Korea Investment vs. Hyosung Advanced Materials | Korea Investment vs. Hyundai Engineering Plastics | Korea Investment vs. WONIK Materials CoLtd | Korea Investment vs. Solus Advanced Materials |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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