Correlation Between Busan Industrial and Woori Technology
Can any of the company-specific risk be diversified away by investing in both Busan Industrial and Woori Technology 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 Woori Technology 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 Woori Technology, you can compare the effects of market volatilities on Busan Industrial and Woori Technology 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 Woori Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Busan Industrial and Woori Technology.
Diversification Opportunities for Busan Industrial and Woori Technology
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Busan and Woori is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Busan Industrial Co and Woori Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woori Technology 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 Woori Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Woori Technology has no effect on the direction of Busan Industrial i.e., Busan Industrial and Woori Technology go up and down completely randomly.
Pair Corralation between Busan Industrial and Woori Technology
Assuming the 90 days trading horizon Busan Industrial Co is expected to generate 2.8 times more return on investment than Woori Technology. However, Busan Industrial is 2.8 times more volatile than Woori Technology. It trades about 0.09 of its potential returns per unit of risk. Woori Technology is currently generating about 0.05 per unit of risk. If you would invest 5,600,000 in Busan Industrial Co on September 1, 2024 and sell it today you would earn a total of 540,000 from holding Busan Industrial Co or generate 9.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Busan Industrial Co vs. Woori Technology
Performance |
| Timeline |
| Busan Industrial |
| Woori Technology |
Busan Industrial and Woori Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Busan Industrial and Woori Technology
The main advantage of trading using opposite Busan Industrial and Woori Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Busan Industrial position performs unexpectedly, Woori Technology 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 Woori Technology will offset losses from the drop in Woori Technology's long position.| Busan Industrial vs. AptaBio Therapeutics | Busan Industrial vs. Daewoo SBI SPAC | Busan Industrial vs. Dream Security co | Busan Industrial vs. Microfriend |
| Woori Technology vs. Dongsin Engineering Construction | Woori Technology vs. Doosan Fuel Cell | Woori Technology vs. Daishin Balance 1 | Woori Technology vs. Total Soft Bank |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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