Correlation Between Busan Ind and MiraeAsset TIGER
Can any of the company-specific risk be diversified away by investing in both Busan Ind and MiraeAsset TIGER 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 MiraeAsset TIGER into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Busan Ind and MiraeAsset TIGER NIKKEI225, you can compare the effects of market volatilities on Busan Ind and MiraeAsset TIGER 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 MiraeAsset TIGER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Busan Ind and MiraeAsset TIGER.
Diversification Opportunities for Busan Ind and MiraeAsset TIGER
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Busan and MiraeAsset is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Busan Ind and MiraeAsset TIGER NIKKEI225 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MiraeAsset TIGER NIK 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 MiraeAsset TIGER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MiraeAsset TIGER NIK has no effect on the direction of Busan Ind i.e., Busan Ind and MiraeAsset TIGER go up and down completely randomly.
Pair Corralation between Busan Ind and MiraeAsset TIGER
Assuming the 90 days trading horizon Busan Ind is expected to generate 2.8 times more return on investment than MiraeAsset TIGER. However, Busan Ind is 2.8 times more volatile than MiraeAsset TIGER NIKKEI225. It trades about 0.04 of its potential returns per unit of risk. MiraeAsset TIGER NIKKEI225 is currently generating about 0.03 per unit of risk. If you would invest 5,540,000 in Busan Ind on August 31, 2024 and sell it today you would earn a total of 600,000 from holding Busan Ind or generate 10.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Busan Ind vs. MiraeAsset TIGER NIKKEI225
Performance |
| Timeline |
| Busan Ind |
| MiraeAsset TIGER NIK |
Busan Ind and MiraeAsset TIGER Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Busan Ind and MiraeAsset TIGER
The main advantage of trading using opposite Busan Ind and MiraeAsset TIGER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Busan Ind position performs unexpectedly, MiraeAsset TIGER 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 MiraeAsset TIGER will offset losses from the drop in MiraeAsset TIGER's long position.| Busan Ind vs. Haitai Confectionery Foods | Busan Ind vs. Taeyang Metal Industrial | Busan Ind vs. FoodNamoo | Busan Ind vs. Hanjoo Light Metal |
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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