Correlation Between Busan Ind and KIM KINDEX
Can any of the company-specific risk be diversified away by investing in both Busan Ind and KIM KINDEX 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 KIM KINDEX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Busan Ind and KIM KINDEX KOSPI, you can compare the effects of market volatilities on Busan Ind and KIM KINDEX 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 KIM KINDEX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Busan Ind and KIM KINDEX.
Diversification Opportunities for Busan Ind and KIM KINDEX
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Busan and KIM is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Busan Ind and KIM KINDEX KOSPI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KIM KINDEX KOSPI 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 KIM KINDEX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KIM KINDEX KOSPI has no effect on the direction of Busan Ind i.e., Busan Ind and KIM KINDEX go up and down completely randomly.
Pair Corralation between Busan Ind and KIM KINDEX
Assuming the 90 days trading horizon Busan Ind is expected to under-perform the KIM KINDEX. In addition to that, Busan Ind is 2.78 times more volatile than KIM KINDEX KOSPI. It trades about -0.01 of its total potential returns per unit of risk. KIM KINDEX KOSPI is currently generating about 0.02 per unit of volatility. If you would invest 2,349,493 in KIM KINDEX KOSPI on September 2, 2024 and sell it today you would earn a total of 197,507 from holding KIM KINDEX KOSPI or generate 8.41% 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. KIM KINDEX KOSPI
Performance |
| Timeline |
| Busan Ind |
| KIM KINDEX KOSPI |
Busan Ind and KIM KINDEX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Busan Ind and KIM KINDEX
The main advantage of trading using opposite Busan Ind and KIM KINDEX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Busan Ind position performs unexpectedly, KIM KINDEX 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 KIM KINDEX will offset losses from the drop in KIM KINDEX's long position.| Busan Ind vs. Daelim Industrial Co | Busan Ind vs. Samhwa Paint Industrial | Busan Ind vs. Daesung Hi Tech Co | Busan Ind vs. Korea Computer |
| KIM KINDEX vs. Busan Industrial Co | KIM KINDEX vs. Busan Ind | KIM KINDEX vs. Mirae Asset Daewoo | KIM KINDEX vs. Shinhan WTI Futures |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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