Correlation Between Busan Industrial and Daewon Media
Can any of the company-specific risk be diversified away by investing in both Busan Industrial and Daewon Media 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 Daewon Media 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 Daewon Media Co, you can compare the effects of market volatilities on Busan Industrial and Daewon Media 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 Daewon Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Busan Industrial and Daewon Media.
Diversification Opportunities for Busan Industrial and Daewon Media
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Busan and Daewon is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Busan Industrial Co and Daewon Media Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daewon Media 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 Daewon Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daewon Media has no effect on the direction of Busan Industrial i.e., Busan Industrial and Daewon Media go up and down completely randomly.
Pair Corralation between Busan Industrial and Daewon Media
Assuming the 90 days trading horizon Busan Industrial is expected to generate 2.49 times less return on investment than Daewon Media. But when comparing it to its historical volatility, Busan Industrial Co is 1.09 times less risky than Daewon Media. It trades about 0.03 of its potential returns per unit of risk. Daewon Media Co is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 857,000 in Daewon Media Co on November 6, 2024 and sell it today you would earn a total of 20,000 from holding Daewon Media Co or generate 2.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Busan Industrial Co vs. Daewon Media Co
Performance |
| Timeline |
| Busan Industrial |
| Daewon Media |
Busan Industrial and Daewon Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Busan Industrial and Daewon Media
The main advantage of trading using opposite Busan Industrial and Daewon Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Busan Industrial position performs unexpectedly, Daewon Media 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 Daewon Media will offset losses from the drop in Daewon Media's long position.| Busan Industrial vs. TK Chemical | Busan Industrial vs. Kyung In Synthetic Corp | Busan Industrial vs. Daejung Chemicals Metals | Busan Industrial vs. Kg Chemical |
| Daewon Media vs. Keyang Electric Machinery | Daewon Media vs. Playgram Co | Daewon Media vs. Woorim Machinery Co | Daewon Media vs. Display Tech 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 CEOs Directory module to screen CEOs from public companies around the world.
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