Correlation Between Busan Ind and Namhwa Industrial
Can any of the company-specific risk be diversified away by investing in both Busan Ind and Namhwa Industrial 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 Namhwa Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Busan Ind and Namhwa Industrial Co, you can compare the effects of market volatilities on Busan Ind and Namhwa Industrial 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 Namhwa Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Busan Ind and Namhwa Industrial.
Diversification Opportunities for Busan Ind and Namhwa Industrial
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Busan and Namhwa is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Busan Ind and Namhwa Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Namhwa Industrial 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 Namhwa Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Namhwa Industrial has no effect on the direction of Busan Ind i.e., Busan Ind and Namhwa Industrial go up and down completely randomly.
Pair Corralation between Busan Ind and Namhwa Industrial
Assuming the 90 days trading horizon Busan Ind is expected to generate 2.6 times more return on investment than Namhwa Industrial. However, Busan Ind is 2.6 times more volatile than Namhwa Industrial Co. It trades about 0.06 of its potential returns per unit of risk. Namhwa Industrial Co is currently generating about 0.14 per unit of risk. If you would invest 5,140,000 in Busan Ind on August 25, 2024 and sell it today you would earn a total of 360,000 from holding Busan Ind or generate 7.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Busan Ind vs. Namhwa Industrial Co
Performance |
| Timeline |
| Busan Ind |
| Namhwa Industrial |
Busan Ind and Namhwa Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Busan Ind and Namhwa Industrial
The main advantage of trading using opposite Busan Ind and Namhwa Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Busan Ind position performs unexpectedly, Namhwa Industrial 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 Namhwa Industrial will offset losses from the drop in Namhwa Industrial's long position.| Busan Ind vs. GS Retail Co | Busan Ind vs. Playgram Co | Busan Ind vs. Taeyang Metal Industrial | Busan Ind vs. Cheryong Industrial CoLtd |
| Namhwa Industrial vs. Hanjinkal | Namhwa Industrial vs. Busan Industrial Co | Namhwa Industrial vs. Busan Ind | Namhwa Industrial 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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