Correlation Between Busan Ind and NewFlex Technology
Can any of the company-specific risk be diversified away by investing in both Busan Ind and NewFlex Technology 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 NewFlex Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Busan Ind and NewFlex Technology Co, you can compare the effects of market volatilities on Busan Ind and NewFlex Technology 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 NewFlex Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Busan Ind and NewFlex Technology.
Diversification Opportunities for Busan Ind and NewFlex Technology
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Busan and NewFlex is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Busan Ind and NewFlex Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NewFlex Technology 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 NewFlex Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NewFlex Technology has no effect on the direction of Busan Ind i.e., Busan Ind and NewFlex Technology go up and down completely randomly.
Pair Corralation between Busan Ind and NewFlex Technology
Assuming the 90 days trading horizon Busan Ind is expected to generate 2.25 times more return on investment than NewFlex Technology. However, Busan Ind is 2.25 times more volatile than NewFlex Technology Co. It trades about 0.08 of its potential returns per unit of risk. NewFlex Technology Co is currently generating about -0.24 per unit of risk. If you would invest 5,280,000 in Busan Ind on August 29, 2024 and sell it today you would earn a total of 400,000 from holding Busan Ind or generate 7.58% 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. NewFlex Technology Co
Performance |
| Timeline |
| Busan Ind |
| NewFlex Technology |
Busan Ind and NewFlex Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Busan Ind and NewFlex Technology
The main advantage of trading using opposite Busan Ind and NewFlex Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Busan Ind position performs unexpectedly, NewFlex Technology 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 NewFlex Technology will offset losses from the drop in NewFlex Technology'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 |
| NewFlex Technology vs. Daou Data Corp | NewFlex Technology vs. Busan Industrial Co | NewFlex Technology vs. Busan Ind | NewFlex Technology 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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