Correlation Between Busan Industrial and KTB Investment
Can any of the company-specific risk be diversified away by investing in both Busan Industrial and KTB Investment 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 KTB Investment 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 KTB Investment Securities, you can compare the effects of market volatilities on Busan Industrial and KTB Investment 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 KTB Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Busan Industrial and KTB Investment.
Diversification Opportunities for Busan Industrial and KTB Investment
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Busan and KTB is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Busan Industrial Co and KTB Investment Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KTB Investment Securities 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 KTB Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KTB Investment Securities has no effect on the direction of Busan Industrial i.e., Busan Industrial and KTB Investment go up and down completely randomly.
Pair Corralation between Busan Industrial and KTB Investment
Assuming the 90 days trading horizon Busan Industrial Co is expected to generate 3.32 times more return on investment than KTB Investment. However, Busan Industrial is 3.32 times more volatile than KTB Investment Securities. It trades about 0.2 of its potential returns per unit of risk. KTB Investment Securities is currently generating about 0.3 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 | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Busan Industrial Co vs. KTB Investment Securities
Performance |
| Timeline |
| Busan Industrial |
| KTB Investment Securities |
Busan Industrial and KTB Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Busan Industrial and KTB Investment
The main advantage of trading using opposite Busan Industrial and KTB Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Busan Industrial position performs unexpectedly, KTB Investment 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 KTB Investment will offset losses from the drop in KTB Investment'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 |
| KTB Investment vs. AptaBio Therapeutics | KTB Investment vs. Wonbang Tech Co | KTB Investment vs. Busan Industrial Co | KTB Investment 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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