Correlation Between Busan Industrial and Sejong Industrial
Can any of the company-specific risk be diversified away by investing in both Busan Industrial and Sejong Industrial 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 Sejong Industrial 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 Sejong Industrial, you can compare the effects of market volatilities on Busan Industrial and Sejong Industrial 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 Sejong Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Busan Industrial and Sejong Industrial.
Diversification Opportunities for Busan Industrial and Sejong Industrial
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Busan and Sejong is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Busan Industrial Co and Sejong Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sejong Industrial 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 Sejong Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sejong Industrial has no effect on the direction of Busan Industrial i.e., Busan Industrial and Sejong Industrial go up and down completely randomly.
Pair Corralation between Busan Industrial and Sejong Industrial
Assuming the 90 days trading horizon Busan Industrial Co is expected to generate 1.18 times more return on investment than Sejong Industrial. However, Busan Industrial is 1.18 times more volatile than Sejong Industrial. It trades about -0.01 of its potential returns per unit of risk. Sejong Industrial is currently generating about -0.02 per unit of risk. If you would invest 8,288,836 in Busan Industrial Co on September 3, 2024 and sell it today you would lose (2,148,836) from holding Busan Industrial Co or give up 25.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Busan Industrial Co vs. Sejong Industrial
Performance |
| Timeline |
| Busan Industrial |
| Sejong Industrial |
Busan Industrial and Sejong Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Busan Industrial and Sejong Industrial
The main advantage of trading using opposite Busan Industrial and Sejong Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Busan Industrial position performs unexpectedly, Sejong Industrial 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 Sejong Industrial will offset losses from the drop in Sejong Industrial's long position.| Busan Industrial vs. Pureun Mutual Savings | Busan Industrial vs. Atinum Investment Co | Busan Industrial vs. Korea Investment Holdings | Busan Industrial vs. Hanjoo Light Metal |
| Sejong Industrial vs. Korea Real Estate | Sejong Industrial vs. Busan Industrial Co | Sejong Industrial vs. UNISEM Co | Sejong Industrial vs. RPBio Inc |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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