Correlation Between Busan Industrial and ICD
Can any of the company-specific risk be diversified away by investing in both Busan Industrial and ICD 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 ICD 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 ICD Co, you can compare the effects of market volatilities on Busan Industrial and ICD 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 ICD. Check out your portfolio center. Please also check ongoing floating volatility patterns of Busan Industrial and ICD.
Diversification Opportunities for Busan Industrial and ICD
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Busan and ICD is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Busan Industrial Co and ICD Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ICD Co 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 ICD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ICD Co has no effect on the direction of Busan Industrial i.e., Busan Industrial and ICD go up and down completely randomly.
Pair Corralation between Busan Industrial and ICD
Assuming the 90 days trading horizon Busan Industrial Co is expected to generate 2.24 times more return on investment than ICD. However, Busan Industrial is 2.24 times more volatile than ICD Co. It trades about 0.02 of its potential returns per unit of risk. ICD Co is currently generating about -0.28 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. ICD Co
Performance |
| Timeline |
| Busan Industrial |
| ICD Co |
Busan Industrial and ICD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Busan Industrial and ICD
The main advantage of trading using opposite Busan Industrial and ICD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Busan Industrial position performs unexpectedly, ICD 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 ICD will offset losses from the drop in ICD's long position.| Busan Industrial vs. AptaBio Therapeutics | Busan Industrial vs. Daewoo SBI SPAC | Busan Industrial vs. Dream Security co | Busan Industrial vs. Microfriend |
| ICD vs. Samsung Electronics Co | ICD vs. Samsung Electronics Co | ICD vs. LG Energy Solution | ICD vs. SK Hynix |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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