Correlation Between Busan Ind and Foodnamoo
Can any of the company-specific risk be diversified away by investing in both Busan Ind and Foodnamoo 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 Foodnamoo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Busan Ind and Foodnamoo, you can compare the effects of market volatilities on Busan Ind and Foodnamoo 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 Foodnamoo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Busan Ind and Foodnamoo.
Diversification Opportunities for Busan Ind and Foodnamoo
Excellent diversification
The 3 months correlation between Busan and Foodnamoo is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Busan Ind and Foodnamoo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Foodnamoo 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 Foodnamoo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Foodnamoo has no effect on the direction of Busan Ind i.e., Busan Ind and Foodnamoo go up and down completely randomly.
Pair Corralation between Busan Ind and Foodnamoo
Assuming the 90 days trading horizon Busan Ind is expected to under-perform the Foodnamoo. In addition to that, Busan Ind is 1.32 times more volatile than Foodnamoo. It trades about -0.01 of its total potential returns per unit of risk. Foodnamoo is currently generating about 0.14 per unit of volatility. If you would invest 255,500 in Foodnamoo on November 28, 2024 and sell it today you would earn a total of 13,500 from holding Foodnamoo or generate 5.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Busan Ind vs. Foodnamoo
Performance |
| Timeline |
| Busan Ind |
| Foodnamoo |
Busan Ind and Foodnamoo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Busan Ind and Foodnamoo
The main advantage of trading using opposite Busan Ind and Foodnamoo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Busan Ind position performs unexpectedly, Foodnamoo 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 Foodnamoo will offset losses from the drop in Foodnamoo's long position.| Busan Ind vs. Automobile Pc | Busan Ind vs. Daehan Steel | Busan Ind vs. Dongkuk Steel Mill | Busan Ind vs. Fine Besteel Co |
| Foodnamoo vs. SBI Investment KOREA | Foodnamoo vs. BGF Retail Co | Foodnamoo vs. PJ Metal Co | Foodnamoo vs. Formetal Co |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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