Correlation Between Busan Industrial and Shinsegae Food
Can any of the company-specific risk be diversified away by investing in both Busan Industrial and Shinsegae Food 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 Shinsegae Food 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 Shinsegae Food, you can compare the effects of market volatilities on Busan Industrial and Shinsegae Food 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 Shinsegae Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Busan Industrial and Shinsegae Food.
Diversification Opportunities for Busan Industrial and Shinsegae Food
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Busan and Shinsegae is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Busan Industrial Co and Shinsegae Food in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinsegae Food 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 Shinsegae Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shinsegae Food has no effect on the direction of Busan Industrial i.e., Busan Industrial and Shinsegae Food go up and down completely randomly.
Pair Corralation between Busan Industrial and Shinsegae Food
Assuming the 90 days trading horizon Busan Industrial Co is expected to generate 2.01 times more return on investment than Shinsegae Food. However, Busan Industrial is 2.01 times more volatile than Shinsegae Food. It trades about -0.01 of its potential returns per unit of risk. Shinsegae Food is currently generating about -0.04 per unit of risk. If you would invest 6,350,000 in Busan Industrial Co on August 25, 2024 and sell it today you would lose (850,000) from holding Busan Industrial Co or give up 13.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Busan Industrial Co vs. Shinsegae Food
Performance |
| Timeline |
| Busan Industrial |
| Shinsegae Food |
Busan Industrial and Shinsegae Food Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Busan Industrial and Shinsegae Food
The main advantage of trading using opposite Busan Industrial and Shinsegae Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Busan Industrial position performs unexpectedly, Shinsegae Food 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 Shinsegae Food will offset losses from the drop in Shinsegae Food's long position.| Busan Industrial vs. Taeyang Metal Industrial | Busan Industrial vs. Lake Materials Co | Busan Industrial vs. Asiana Airlines | Busan Industrial vs. Ssangyong Materials Corp |
| Shinsegae Food vs. Busan Industrial Co | Shinsegae Food vs. Busan Ind | Shinsegae Food vs. Mirae Asset Daewoo | Shinsegae Food vs. UNISEM 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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