Correlation Between Busan Industrial and Korean Drug
Can any of the company-specific risk be diversified away by investing in both Busan Industrial and Korean Drug 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 Korean Drug 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 Korean Drug Co, you can compare the effects of market volatilities on Busan Industrial and Korean Drug 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 Korean Drug. Check out your portfolio center. Please also check ongoing floating volatility patterns of Busan Industrial and Korean Drug.
Diversification Opportunities for Busan Industrial and Korean Drug
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Busan and Korean is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Busan Industrial Co and Korean Drug Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korean Drug 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 Korean Drug. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korean Drug has no effect on the direction of Busan Industrial i.e., Busan Industrial and Korean Drug go up and down completely randomly.
Pair Corralation between Busan Industrial and Korean Drug
Assuming the 90 days trading horizon Busan Industrial Co is expected to under-perform the Korean Drug. In addition to that, Busan Industrial is 1.39 times more volatile than Korean Drug Co. It trades about -0.01 of its total potential returns per unit of risk. Korean Drug Co is currently generating about 0.07 per unit of volatility. If you would invest 469,500 in Korean Drug Co on November 4, 2024 and sell it today you would earn a total of 9,000 from holding Korean Drug Co or generate 1.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 94.44% |
| Values | Daily Returns |
Busan Industrial Co vs. Korean Drug Co
Performance |
| Timeline |
| Busan Industrial |
| Korean Drug |
Busan Industrial and Korean Drug Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Busan Industrial and Korean Drug
The main advantage of trading using opposite Busan Industrial and Korean Drug positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Busan Industrial position performs unexpectedly, Korean Drug 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 Korean Drug will offset losses from the drop in Korean Drug's long position.| Busan Industrial vs. Leaders Technology Investment | Busan Industrial vs. Korea Investment Holdings | Busan Industrial vs. Golden Bridge Investment | Busan Industrial vs. Sangsangin Investment Securities |
| Korean Drug vs. SungMoon Electronics Co | Korean Drug vs. Korea Electronic Certification | Korean Drug vs. Jahwa Electronics Co | Korean Drug vs. Samlip General Foods |
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 Stocks Directory module to find actively traded stocks across global markets.
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