Correlation Between Busan Industrial and Korea Information
Can any of the company-specific risk be diversified away by investing in both Busan Industrial and Korea Information 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 Korea Information 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 Korea Information Engineering, you can compare the effects of market volatilities on Busan Industrial and Korea Information 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 Korea Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Busan Industrial and Korea Information.
Diversification Opportunities for Busan Industrial and Korea Information
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Busan and Korea is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Busan Industrial Co and Korea Information Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Information 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 Korea Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Information has no effect on the direction of Busan Industrial i.e., Busan Industrial and Korea Information go up and down completely randomly.
Pair Corralation between Busan Industrial and Korea Information
Assuming the 90 days trading horizon Busan Industrial Co is expected to generate 4.71 times more return on investment than Korea Information. However, Busan Industrial is 4.71 times more volatile than Korea Information Engineering. It trades about 0.18 of its potential returns per unit of risk. Korea Information Engineering is currently generating about -0.15 per unit of risk. If you would invest 5,010,000 in Busan Industrial Co on August 30, 2024 and sell it today you would earn a total of 2,370,000 from holding Busan Industrial Co or generate 47.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Busan Industrial Co vs. Korea Information Engineering
Performance |
| Timeline |
| Busan Industrial |
| Korea Information |
Busan Industrial and Korea Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Busan Industrial and Korea Information
The main advantage of trading using opposite Busan Industrial and Korea Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Busan Industrial position performs unexpectedly, Korea Information 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 Korea Information will offset losses from the drop in Korea Information's long position.| Busan Industrial vs. AptaBio Therapeutics | Busan Industrial vs. Daewoo SBI SPAC | Busan Industrial vs. Dream Security co | Busan Industrial vs. Microfriend |
| Korea Information vs. Daou Data Corp | Korea Information vs. Busan Industrial Co | Korea Information vs. Busan Ind | Korea Information vs. Shinhan WTI Futures |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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