Correlation Between Busan Industrial and Samyung Trading
Can any of the company-specific risk be diversified away by investing in both Busan Industrial and Samyung Trading 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 Samyung Trading 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 Samyung Trading Co, you can compare the effects of market volatilities on Busan Industrial and Samyung Trading 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 Samyung Trading. Check out your portfolio center. Please also check ongoing floating volatility patterns of Busan Industrial and Samyung Trading.
Diversification Opportunities for Busan Industrial and Samyung Trading
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Busan and Samyung is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Busan Industrial Co and Samyung Trading Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samyung Trading 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 Samyung Trading. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samyung Trading has no effect on the direction of Busan Industrial i.e., Busan Industrial and Samyung Trading go up and down completely randomly.
Pair Corralation between Busan Industrial and Samyung Trading
Assuming the 90 days trading horizon Busan Industrial Co is expected to under-perform the Samyung Trading. In addition to that, Busan Industrial is 2.16 times more volatile than Samyung Trading Co. It trades about -0.23 of its total potential returns per unit of risk. Samyung Trading Co is currently generating about -0.19 per unit of volatility. If you would invest 1,309,000 in Samyung Trading Co on October 15, 2024 and sell it today you would lose (45,000) from holding Samyung Trading Co or give up 3.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Busan Industrial Co vs. Samyung Trading Co
Performance |
| Timeline |
| Busan Industrial |
| Samyung Trading |
Busan Industrial and Samyung Trading Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Busan Industrial and Samyung Trading
The main advantage of trading using opposite Busan Industrial and Samyung Trading positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Busan Industrial position performs unexpectedly, Samyung Trading 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 Samyung Trading will offset losses from the drop in Samyung Trading's long position.| Busan Industrial vs. Fine Besteel Co | Busan Industrial vs. Daehan Steel | Busan Industrial vs. Shin Steel Co | Busan Industrial vs. Jin Air Co |
| Samyung Trading vs. iNtRON Biotechnology | Samyung Trading vs. Seoul Semiconductor Co | Samyung Trading vs. Sangsangin Investment Securities | Samyung Trading vs. Daelim Trading 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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