Correlation Between Busan Industrial and Stic Investments
Can any of the company-specific risk be diversified away by investing in both Busan Industrial and Stic Investments 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 Stic Investments 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 Stic Investments, you can compare the effects of market volatilities on Busan Industrial and Stic Investments 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 Stic Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Busan Industrial and Stic Investments.
Diversification Opportunities for Busan Industrial and Stic Investments
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Busan and Stic is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Busan Industrial Co and Stic Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stic Investments 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 Stic Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stic Investments has no effect on the direction of Busan Industrial i.e., Busan Industrial and Stic Investments go up and down completely randomly.
Pair Corralation between Busan Industrial and Stic Investments
Assuming the 90 days trading horizon Busan Industrial is expected to generate 1.95 times less return on investment than Stic Investments. In addition to that, Busan Industrial is 1.36 times more volatile than Stic Investments. It trades about 0.02 of its total potential returns per unit of risk. Stic Investments is currently generating about 0.05 per unit of volatility. If you would invest 566,331 in Stic Investments on November 27, 2024 and sell it today you would earn a total of 268,669 from holding Stic Investments or generate 47.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Busan Industrial Co vs. Stic Investments
Performance |
| Timeline |
| Busan Industrial |
| Stic Investments |
Busan Industrial and Stic Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Busan Industrial and Stic Investments
The main advantage of trading using opposite Busan Industrial and Stic Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Busan Industrial position performs unexpectedly, Stic Investments 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 Stic Investments will offset losses from the drop in Stic Investments' long position.| Busan Industrial vs. ADTechnology CoLtd | Busan Industrial vs. Hwangkum Steel Technology | Busan Industrial vs. Dongil Metal Co | Busan Industrial vs. Cots Technology Co |
| Stic Investments vs. Alton Sports CoLtd | Stic Investments vs. Playgram Co | Stic Investments vs. Dongwoon Anatech Co | Stic Investments vs. Hanyang Digitech 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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