Correlation Between Busan Industrial and HYUNDAI BIOLAND
Can any of the company-specific risk be diversified away by investing in both Busan Industrial and HYUNDAI BIOLAND 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 HYUNDAI BIOLAND 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 HYUNDAI BIOLAND CoLtd, you can compare the effects of market volatilities on Busan Industrial and HYUNDAI BIOLAND 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 HYUNDAI BIOLAND. Check out your portfolio center. Please also check ongoing floating volatility patterns of Busan Industrial and HYUNDAI BIOLAND.
Diversification Opportunities for Busan Industrial and HYUNDAI BIOLAND
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Busan and HYUNDAI is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Busan Industrial Co and HYUNDAI BIOLAND CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HYUNDAI BIOLAND CoLtd 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 HYUNDAI BIOLAND. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HYUNDAI BIOLAND CoLtd has no effect on the direction of Busan Industrial i.e., Busan Industrial and HYUNDAI BIOLAND go up and down completely randomly.
Pair Corralation between Busan Industrial and HYUNDAI BIOLAND
Assuming the 90 days trading horizon Busan Industrial Co is expected to under-perform the HYUNDAI BIOLAND. In addition to that, Busan Industrial is 1.67 times more volatile than HYUNDAI BIOLAND CoLtd. It trades about -0.02 of its total potential returns per unit of risk. HYUNDAI BIOLAND CoLtd is currently generating about 0.06 per unit of volatility. If you would invest 472,500 in HYUNDAI BIOLAND CoLtd on November 9, 2024 and sell it today you would earn a total of 9,500 from holding HYUNDAI BIOLAND CoLtd or generate 2.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 94.74% |
| Values | Daily Returns |
Busan Industrial Co vs. HYUNDAI BIOLAND CoLtd
Performance |
| Timeline |
| Busan Industrial |
| HYUNDAI BIOLAND CoLtd |
Busan Industrial and HYUNDAI BIOLAND Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Busan Industrial and HYUNDAI BIOLAND
The main advantage of trading using opposite Busan Industrial and HYUNDAI BIOLAND positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Busan Industrial position performs unexpectedly, HYUNDAI BIOLAND 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 HYUNDAI BIOLAND will offset losses from the drop in HYUNDAI BIOLAND's long position.| Busan Industrial vs. Kg Chemical | Busan Industrial vs. Dongnam Chemical Co | Busan Industrial vs. Korea Petro Chemical | Busan Industrial vs. Kukdo Chemical Co |
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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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