Correlation Between Busan Industrial and Bosung Power
Can any of the company-specific risk be diversified away by investing in both Busan Industrial and Bosung Power 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 Bosung Power 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 Bosung Power Technology, you can compare the effects of market volatilities on Busan Industrial and Bosung Power 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 Bosung Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Busan Industrial and Bosung Power.
Diversification Opportunities for Busan Industrial and Bosung Power
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Busan and Bosung is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Busan Industrial Co and Bosung Power Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bosung Power Technology 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 Bosung Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bosung Power Technology has no effect on the direction of Busan Industrial i.e., Busan Industrial and Bosung Power go up and down completely randomly.
Pair Corralation between Busan Industrial and Bosung Power
Assuming the 90 days trading horizon Busan Industrial Co is expected to generate 4.91 times more return on investment than Bosung Power. However, Busan Industrial is 4.91 times more volatile than Bosung Power Technology. It trades about 0.1 of its potential returns per unit of risk. Bosung Power Technology is currently generating about -0.14 per unit of risk. If you would invest 5,480,000 in Busan Industrial Co on September 3, 2024 and sell it today you would earn a total of 660,000 from holding Busan Industrial Co or generate 12.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Busan Industrial Co vs. Bosung Power Technology
Performance |
| Timeline |
| Busan Industrial |
| Bosung Power Technology |
Busan Industrial and Bosung Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Busan Industrial and Bosung Power
The main advantage of trading using opposite Busan Industrial and Bosung Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Busan Industrial position performs unexpectedly, Bosung Power 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 Bosung Power will offset losses from the drop in Bosung Power's long position.| Busan Industrial vs. Pureun Mutual Savings | Busan Industrial vs. Atinum Investment Co | Busan Industrial vs. Korea Investment Holdings | Busan Industrial vs. Hanjoo Light Metal |
| Bosung Power vs. LG Display | Bosung Power vs. Hyundai Motor | Bosung Power vs. Hyundai Motor Co | Bosung Power vs. Hyundai Motor 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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