Correlation Between Busan Industrial and Nature
Can any of the company-specific risk be diversified away by investing in both Busan Industrial and Nature 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 Nature 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 Nature and Environment, you can compare the effects of market volatilities on Busan Industrial and Nature 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 Nature. Check out your portfolio center. Please also check ongoing floating volatility patterns of Busan Industrial and Nature.
Diversification Opportunities for Busan Industrial and Nature
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Busan and Nature is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Busan Industrial Co and Nature and Environment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nature and Environment 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 Nature. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nature and Environment has no effect on the direction of Busan Industrial i.e., Busan Industrial and Nature go up and down completely randomly.
Pair Corralation between Busan Industrial and Nature
Assuming the 90 days trading horizon Busan Industrial Co is expected to generate 2.18 times more return on investment than Nature. However, Busan Industrial is 2.18 times more volatile than Nature and Environment. It trades about 0.12 of its potential returns per unit of risk. Nature and Environment is currently generating about -0.06 per unit of risk. If you would invest 5,212,613 in Busan Industrial Co on November 2, 2024 and sell it today you would earn a total of 3,007,387 from holding Busan Industrial Co or generate 57.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Busan Industrial Co vs. Nature and Environment
Performance |
| Timeline |
| Busan Industrial |
| Nature and Environment |
Busan Industrial and Nature Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Busan Industrial and Nature
The main advantage of trading using opposite Busan Industrial and Nature positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Busan Industrial position performs unexpectedly, Nature 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 Nature will offset losses from the drop in Nature's long position.| Busan Industrial vs. Camus Engineering Construction | Busan Industrial vs. TJ media Co | Busan Industrial vs. Dongbang Ship Machinery | Busan Industrial vs. SKONEC Entertainment Co |
| Nature vs. Korea Shipbuilding Offshore | Nature vs. Lotte Data Communication | Nature vs. Lion Chemtech Co | Nature vs. Woori Technology |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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