Correlation Between Busan Industrial and NICE Total
Can any of the company-specific risk be diversified away by investing in both Busan Industrial and NICE Total 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 NICE Total 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 NICE Total Cash, you can compare the effects of market volatilities on Busan Industrial and NICE Total 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 NICE Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of Busan Industrial and NICE Total.
Diversification Opportunities for Busan Industrial and NICE Total
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Busan and NICE is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Busan Industrial Co and NICE Total Cash in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NICE Total Cash 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 NICE Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NICE Total Cash has no effect on the direction of Busan Industrial i.e., Busan Industrial and NICE Total go up and down completely randomly.
Pair Corralation between Busan Industrial and NICE Total
Assuming the 90 days trading horizon Busan Industrial Co is expected to generate 4.54 times more return on investment than NICE Total. However, Busan Industrial is 4.54 times more volatile than NICE Total Cash. It trades about 0.2 of its potential returns per unit of risk. NICE Total Cash is currently generating about -0.01 per unit of risk. If you would invest 5,800,000 in Busan Industrial Co on September 13, 2024 and sell it today you would earn a total of 1,980,000 from holding Busan Industrial Co or generate 34.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Busan Industrial Co vs. NICE Total Cash
Performance |
| Timeline |
| Busan Industrial |
| NICE Total Cash |
Busan Industrial and NICE Total Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Busan Industrial and NICE Total
The main advantage of trading using opposite Busan Industrial and NICE Total positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Busan Industrial position performs unexpectedly, NICE Total 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 NICE Total will offset losses from the drop in NICE Total's long position.| Busan Industrial vs. Samsung Electronics Co | Busan Industrial vs. Samsung Electronics Co | Busan Industrial vs. SK Hynix | Busan Industrial vs. POSCO Holdings |
| NICE Total vs. Korea New Network | NICE Total vs. Solution Advanced Technology | NICE Total vs. Busan Industrial Co | NICE Total vs. Busan Ind |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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