Correlation Between Busan Ind and Woorim Machinery
Can any of the company-specific risk be diversified away by investing in both Busan Ind and Woorim Machinery 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 Woorim Machinery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Busan Ind and Woorim Machinery Co, you can compare the effects of market volatilities on Busan Ind and Woorim Machinery 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 Woorim Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Busan Ind and Woorim Machinery.
Diversification Opportunities for Busan Ind and Woorim Machinery
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Busan and Woorim is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Busan Ind and Woorim Machinery Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woorim 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 Woorim Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Woorim Machinery has no effect on the direction of Busan Ind i.e., Busan Ind and Woorim Machinery go up and down completely randomly.
Pair Corralation between Busan Ind and Woorim Machinery
Assuming the 90 days trading horizon Busan Ind is expected to generate 1.69 times more return on investment than Woorim Machinery. However, Busan Ind is 1.69 times more volatile than Woorim Machinery Co. It trades about 0.2 of its potential returns per unit of risk. Woorim Machinery Co is currently generating about -0.07 per unit of risk. If you would invest 5,800,000 in Busan Ind on September 13, 2024 and sell it today you would earn a total of 1,980,000 from holding Busan Ind or generate 34.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Busan Ind vs. Woorim Machinery Co
Performance |
| Timeline |
| Busan Ind |
| Woorim Machinery |
Busan Ind and Woorim Machinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Busan Ind and Woorim Machinery
The main advantage of trading using opposite Busan Ind and Woorim Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Busan Ind position performs unexpectedly, Woorim Machinery 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 Woorim Machinery will offset losses from the drop in Woorim Machinery's long position.| Busan Ind vs. Finebesteel | Busan Ind vs. Dongbang Transport Logistics | Busan Ind vs. Wonil Special Steel | Busan Ind vs. BGF Retail Co |
| Woorim Machinery vs. LG Household Healthcare | Woorim Machinery vs. Dong A Steel Technology | Woorim Machinery vs. Orbitech Co | Woorim Machinery vs. Choil Aluminum |
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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