Correlation Between Busan Industrial and Hanil Iron
Can any of the company-specific risk be diversified away by investing in both Busan Industrial and Hanil Iron 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 Industrial and Hanil Iron into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Busan Industrial Co and Hanil Iron Steel, you can compare the effects of market volatilities on Busan Industrial and Hanil Iron 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 Industrial with a short position of Hanil Iron. Check out your portfolio center. Please also check ongoing floating volatility patterns of Busan Industrial and Hanil Iron.
Diversification Opportunities for Busan Industrial and Hanil Iron
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Busan and Hanil is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Busan Industrial Co and Hanil Iron Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanil Iron Steel and Busan Industrial 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 Industrial Co are associated (or correlated) with Hanil Iron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanil Iron Steel has no effect on the direction of Busan Industrial i.e., Busan Industrial and Hanil Iron go up and down completely randomly.
Pair Corralation between Busan Industrial and Hanil Iron
Assuming the 90 days trading horizon Busan Industrial Co is expected to under-perform the Hanil Iron. In addition to that, Busan Industrial is 2.14 times more volatile than Hanil Iron Steel. It trades about -0.3 of its total potential returns per unit of risk. Hanil Iron Steel is currently generating about -0.18 per unit of volatility. If you would invest 195,874 in Hanil Iron Steel on October 14, 2024 and sell it today you would lose (6,974) from holding Hanil Iron Steel or give up 3.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Busan Industrial Co vs. Hanil Iron Steel
Performance |
| Timeline |
| Busan Industrial |
| Hanil Iron Steel |
Busan Industrial and Hanil Iron Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Busan Industrial and Hanil Iron
The main advantage of trading using opposite Busan Industrial and Hanil Iron positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Busan Industrial position performs unexpectedly, Hanil Iron 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 Hanil Iron will offset losses from the drop in Hanil Iron's long position.| Busan Industrial vs. Seoul Electronics Telecom | Busan Industrial vs. Jeju Air Co | Busan Industrial vs. Green Cross Medical | Busan Industrial vs. Cuckoo Electronics Co |
| Hanil Iron vs. Samsung Publishing Co | Hanil Iron vs. CKH Food Health | Hanil Iron vs. Samyang Foods Co | Hanil Iron vs. Sajo Seafood |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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