Correlation Between Busan Industrial and Shinhan Financial
Can any of the company-specific risk be diversified away by investing in both Busan Industrial and Shinhan Financial 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 Shinhan Financial 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 Shinhan Financial Group, you can compare the effects of market volatilities on Busan Industrial and Shinhan Financial 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 Shinhan Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Busan Industrial and Shinhan Financial.
Diversification Opportunities for Busan Industrial and Shinhan Financial
-0.82 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Busan and Shinhan is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Busan Industrial Co and Shinhan Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinhan Financial 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 Shinhan Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shinhan Financial has no effect on the direction of Busan Industrial i.e., Busan Industrial and Shinhan Financial go up and down completely randomly.
Pair Corralation between Busan Industrial and Shinhan Financial
Assuming the 90 days trading horizon Busan Industrial Co is expected to generate 3.31 times more return on investment than Shinhan Financial. However, Busan Industrial is 3.31 times more volatile than Shinhan Financial Group. It trades about 0.2 of its potential returns per unit of risk. Shinhan Financial Group is currently generating about -0.15 per unit of risk. If you would invest 5,680,000 in Busan Industrial Co on September 27, 2024 and sell it today you would earn a total of 2,040,000 from holding Busan Industrial Co or generate 35.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Busan Industrial Co vs. Shinhan Financial Group
Performance |
| Timeline |
| Busan Industrial |
| Shinhan Financial |
Busan Industrial and Shinhan Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Busan Industrial and Shinhan Financial
The main advantage of trading using opposite Busan Industrial and Shinhan Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Busan Industrial position performs unexpectedly, Shinhan Financial 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 Shinhan Financial will offset losses from the drop in Shinhan Financial's long position.| Busan Industrial vs. AptaBio Therapeutics | Busan Industrial vs. Wonbang Tech Co | Busan Industrial vs. Busan Ind | Busan Industrial vs. Mirae Asset Daewoo |
| Shinhan Financial vs. Kukdong Oil Chemicals | Shinhan Financial vs. LG Chemicals | Shinhan Financial vs. ABOV Semiconductor Co | Shinhan Financial vs. SK Chemicals 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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