Correlation Between Busan Ind and Shinhan WTI
Can any of the company-specific risk be diversified away by investing in both Busan Ind and Shinhan WTI 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 Shinhan WTI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Busan Ind and Shinhan WTI Futures, you can compare the effects of market volatilities on Busan Ind and Shinhan WTI 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 Shinhan WTI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Busan Ind and Shinhan WTI.
Diversification Opportunities for Busan Ind and Shinhan WTI
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Busan and Shinhan is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Busan Ind and Shinhan WTI Futures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinhan WTI Futures 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 Shinhan WTI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shinhan WTI Futures has no effect on the direction of Busan Ind i.e., Busan Ind and Shinhan WTI go up and down completely randomly.
Pair Corralation between Busan Ind and Shinhan WTI
Assuming the 90 days trading horizon Busan Ind is expected to generate 3.38 times more return on investment than Shinhan WTI. However, Busan Ind is 3.38 times more volatile than Shinhan WTI Futures. It trades about 0.06 of its potential returns per unit of risk. Shinhan WTI Futures is currently generating about 0.1 per unit of risk. If you would invest 5,280,000 in Busan Ind on August 27, 2024 and sell it today you would earn a total of 220,000 from holding Busan Ind or generate 4.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Busan Ind vs. Shinhan WTI Futures
Performance |
| Timeline |
| Busan Ind |
| Shinhan WTI Futures |
Busan Ind and Shinhan WTI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Busan Ind and Shinhan WTI
The main advantage of trading using opposite Busan Ind and Shinhan WTI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Busan Ind position performs unexpectedly, Shinhan WTI 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 Shinhan WTI will offset losses from the drop in Shinhan WTI's long position.| Busan Ind vs. Jinro Distillers Co | Busan Ind vs. Sam Yang Foods | Busan Ind vs. Daelim Industrial Co | Busan Ind vs. Haesung Industrial Co |
| Shinhan WTI vs. Samsung Electronics Co | Shinhan WTI vs. Samsung Electronics Co | Shinhan WTI vs. LG Energy Solution | Shinhan WTI vs. SK Hynix |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk |