Correlation Between Busan Industrial and CJ ENM
Can any of the company-specific risk be diversified away by investing in both Busan Industrial and CJ ENM 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 CJ ENM 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 CJ ENM, you can compare the effects of market volatilities on Busan Industrial and CJ ENM 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 CJ ENM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Busan Industrial and CJ ENM.
Diversification Opportunities for Busan Industrial and CJ ENM
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Busan and 035760 is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Busan Industrial Co and CJ ENM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CJ ENM 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 CJ ENM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CJ ENM has no effect on the direction of Busan Industrial i.e., Busan Industrial and CJ ENM go up and down completely randomly.
Pair Corralation between Busan Industrial and CJ ENM
Assuming the 90 days trading horizon Busan Industrial Co is expected to generate 1.67 times more return on investment than CJ ENM. However, Busan Industrial is 1.67 times more volatile than CJ ENM. It trades about 0.02 of its potential returns per unit of risk. CJ ENM is currently generating about -0.03 per unit of risk. If you would invest 5,570,000 in Busan Industrial Co on August 24, 2024 and sell it today you would lose (40,000) from holding Busan Industrial Co or give up 0.72% 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. CJ ENM
Performance |
| Timeline |
| Busan Industrial |
| CJ ENM |
Busan Industrial and CJ ENM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Busan Industrial and CJ ENM
The main advantage of trading using opposite Busan Industrial and CJ ENM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Busan Industrial position performs unexpectedly, CJ ENM 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 CJ ENM will offset losses from the drop in CJ ENM's long position.| Busan Industrial vs. Cuckoo Electronics Co | Busan Industrial vs. Samwha Electronics Co | Busan Industrial vs. Sungwoo Electronics Co | Busan Industrial vs. Atinum Investment 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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