Correlation Between Busan Ind and Shinhan Copper
Can any of the company-specific risk be diversified away by investing in both Busan Ind and Shinhan Copper 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 Copper 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 Copper Futures, you can compare the effects of market volatilities on Busan Ind and Shinhan Copper 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 Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Busan Ind and Shinhan Copper.
Diversification Opportunities for Busan Ind and Shinhan Copper
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Busan and Shinhan is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Busan Ind and Shinhan Copper Futures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinhan Copper 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 Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shinhan Copper Futures has no effect on the direction of Busan Ind i.e., Busan Ind and Shinhan Copper go up and down completely randomly.
Pair Corralation between Busan Ind and Shinhan Copper
Assuming the 90 days trading horizon Busan Ind is expected to generate 1.02 times less return on investment than Shinhan Copper. In addition to that, Busan Ind is 1.39 times more volatile than Shinhan Copper Futures. It trades about 0.12 of its total potential returns per unit of risk. Shinhan Copper Futures is currently generating about 0.18 per unit of volatility. If you would invest 1,856,000 in Shinhan Copper Futures on October 24, 2024 and sell it today you would earn a total of 84,000 from holding Shinhan Copper Futures or generate 4.53% 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 Copper Futures
Performance |
| Timeline |
| Busan Ind |
| Shinhan Copper Futures |
Busan Ind and Shinhan Copper Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Busan Ind and Shinhan Copper
The main advantage of trading using opposite Busan Ind and Shinhan Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Busan Ind position performs unexpectedly, Shinhan Copper 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 Copper will offset losses from the drop in Shinhan Copper's long position.| Busan Ind vs. Han Kook Steel | Busan Ind vs. DB Insurance Co | Busan Ind vs. Hankukpackage Co | Busan Ind vs. Samsung Life Insurance |
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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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