Correlation Between Busan Ind and Poongsan
Can any of the company-specific risk be diversified away by investing in both Busan Ind and Poongsan 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 Poongsan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Busan Ind and Poongsan, you can compare the effects of market volatilities on Busan Ind and Poongsan 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 Poongsan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Busan Ind and Poongsan.
Diversification Opportunities for Busan Ind and Poongsan
Pay attention - limited upside
The 3 months correlation between Busan and Poongsan is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Busan Ind and Poongsan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Poongsan 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 Poongsan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Poongsan has no effect on the direction of Busan Ind i.e., Busan Ind and Poongsan go up and down completely randomly.
Pair Corralation between Busan Ind and Poongsan
Assuming the 90 days trading horizon Busan Ind is expected to generate 2.39 times more return on investment than Poongsan. However, Busan Ind is 2.39 times more volatile than Poongsan. It trades about 0.2 of its potential returns per unit of risk. Poongsan is currently generating about -0.09 per unit of risk. If you would invest 5,630,000 in Busan Ind on September 25, 2024 and sell it today you would earn a total of 2,090,000 from holding Busan Ind or generate 37.12% 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. Poongsan
Performance |
| Timeline |
| Busan Ind |
| Poongsan |
Busan Ind and Poongsan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Busan Ind and Poongsan
The main advantage of trading using opposite Busan Ind and Poongsan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Busan Ind position performs unexpectedly, Poongsan 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 Poongsan will offset losses from the drop in Poongsan's long position.| Busan Ind vs. Woorim Machinery Co | Busan Ind vs. CU Medical Systems | Busan Ind vs. Hyundai Engineering Construction | Busan Ind vs. Seoul Food Industrial |
| Poongsan vs. LG Chemicals | Poongsan vs. POSCO Holdings | Poongsan vs. Hanwha Solutions | Poongsan vs. Lotte Chemical Corp |
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 CEOs Directory module to screen CEOs from public companies around the world.
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