Correlation Between Busan Ind and Dongbang Ship
Can any of the company-specific risk be diversified away by investing in both Busan Ind and Dongbang Ship 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 Dongbang Ship into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Busan Ind and Dongbang Ship Machinery, you can compare the effects of market volatilities on Busan Ind and Dongbang Ship 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 Dongbang Ship. Check out your portfolio center. Please also check ongoing floating volatility patterns of Busan Ind and Dongbang Ship.
Diversification Opportunities for Busan Ind and Dongbang Ship
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Busan and Dongbang is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Busan Ind and Dongbang Ship Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongbang Ship Machinery 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 Dongbang Ship. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongbang Ship Machinery has no effect on the direction of Busan Ind i.e., Busan Ind and Dongbang Ship go up and down completely randomly.
Pair Corralation between Busan Ind and Dongbang Ship
Assuming the 90 days trading horizon Busan Ind is expected to generate 2.54 times more return on investment than Dongbang Ship. However, Busan Ind is 2.54 times more volatile than Dongbang Ship Machinery. It trades about 0.09 of its potential returns per unit of risk. Dongbang Ship Machinery is currently generating about -0.03 per unit of risk. If you would invest 5,600,000 in Busan Ind on September 1, 2024 and sell it today you would earn a total of 540,000 from holding Busan Ind or generate 9.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Busan Ind vs. Dongbang Ship Machinery
Performance |
| Timeline |
| Busan Ind |
| Dongbang Ship Machinery |
Busan Ind and Dongbang Ship Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Busan Ind and Dongbang Ship
The main advantage of trading using opposite Busan Ind and Dongbang Ship positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Busan Ind position performs unexpectedly, Dongbang Ship 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 Dongbang Ship will offset losses from the drop in Dongbang Ship's long position.| Busan Ind vs. ABCO Electronics Co | Busan Ind vs. KG Eco Technology | Busan Ind vs. PJ Electronics Co | Busan Ind vs. DAEDUCK ELECTRONICS CoLtd |
| Dongbang Ship vs. Korea New Network | Dongbang Ship vs. ICD Co | Dongbang Ship vs. DYPNF CoLtd | Dongbang Ship vs. Busan Industrial Co |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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