Correlation Between Busan Industrial and Daiyang Metal
Can any of the company-specific risk be diversified away by investing in both Busan Industrial and Daiyang Metal 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 Daiyang Metal 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 Daiyang Metal Co, you can compare the effects of market volatilities on Busan Industrial and Daiyang Metal 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 Daiyang Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Busan Industrial and Daiyang Metal.
Diversification Opportunities for Busan Industrial and Daiyang Metal
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Busan and Daiyang is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Busan Industrial Co and Daiyang Metal Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daiyang Metal 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 Daiyang Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daiyang Metal has no effect on the direction of Busan Industrial i.e., Busan Industrial and Daiyang Metal go up and down completely randomly.
Pair Corralation between Busan Industrial and Daiyang Metal
Assuming the 90 days trading horizon Busan Industrial Co is expected to generate 2.9 times more return on investment than Daiyang Metal. However, Busan Industrial is 2.9 times more volatile than Daiyang Metal Co. It trades about 0.2 of its potential returns per unit of risk. Daiyang Metal Co is currently generating about 0.15 per unit of risk. If you would invest 5,630,000 in Busan Industrial Co on September 25, 2024 and sell it today you would earn a total of 2,090,000 from holding Busan Industrial Co or generate 37.12% 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. Daiyang Metal Co
Performance |
| Timeline |
| Busan Industrial |
| Daiyang Metal |
Busan Industrial and Daiyang Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Busan Industrial and Daiyang Metal
The main advantage of trading using opposite Busan Industrial and Daiyang Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Busan Industrial position performs unexpectedly, Daiyang Metal 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 Daiyang Metal will offset losses from the drop in Daiyang Metal's long position.| Busan Industrial vs. AptaBio Therapeutics | Busan Industrial vs. Wonbang Tech Co | Busan Industrial vs. Busan Ind | Busan Industrial vs. Mirae Asset Daewoo |
| Daiyang Metal vs. AptaBio Therapeutics | Daiyang Metal vs. Wonbang Tech Co | Daiyang Metal vs. Busan Industrial Co | Daiyang Metal vs. Busan Ind |
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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