Correlation Between Busan Ind and Wooyang
Can any of the company-specific risk be diversified away by investing in both Busan Ind and Wooyang 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 Wooyang into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Busan Ind and Wooyang Co, you can compare the effects of market volatilities on Busan Ind and Wooyang 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 Wooyang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Busan Ind and Wooyang.
Diversification Opportunities for Busan Ind and Wooyang
Excellent diversification
The 3 months correlation between Busan and Wooyang is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Busan Ind and Wooyang Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wooyang 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 Wooyang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wooyang has no effect on the direction of Busan Ind i.e., Busan Ind and Wooyang go up and down completely randomly.
Pair Corralation between Busan Ind and Wooyang
Assuming the 90 days trading horizon Busan Ind is expected to generate 2.96 times more return on investment than Wooyang. However, Busan Ind is 2.96 times more volatile than Wooyang Co. It trades about 0.09 of its potential returns per unit of risk. Wooyang Co is currently generating about -0.36 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 Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Busan Ind vs. Wooyang Co
Performance |
| Timeline |
| Busan Ind |
| Wooyang |
Busan Ind and Wooyang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Busan Ind and Wooyang
The main advantage of trading using opposite Busan Ind and Wooyang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Busan Ind position performs unexpectedly, Wooyang 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 Wooyang will offset losses from the drop in Wooyang'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 |
| Wooyang vs. Maeil Dairies Co | Wooyang vs. Busan Industrial Co | Wooyang vs. Busan Ind | Wooyang vs. Mirae Asset Daewoo |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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