Correlation Between Busan Industrial and AfreecaTV
Can any of the company-specific risk be diversified away by investing in both Busan Industrial and AfreecaTV 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 AfreecaTV 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 AfreecaTV Co, you can compare the effects of market volatilities on Busan Industrial and AfreecaTV 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 AfreecaTV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Busan Industrial and AfreecaTV.
Diversification Opportunities for Busan Industrial and AfreecaTV
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Busan and AfreecaTV is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Busan Industrial Co and AfreecaTV Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AfreecaTV 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 AfreecaTV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AfreecaTV has no effect on the direction of Busan Industrial i.e., Busan Industrial and AfreecaTV go up and down completely randomly.
Pair Corralation between Busan Industrial and AfreecaTV
Assuming the 90 days trading horizon Busan Industrial is expected to generate 1.75 times less return on investment than AfreecaTV. In addition to that, Busan Industrial is 1.63 times more volatile than AfreecaTV Co. It trades about 0.08 of its total potential returns per unit of risk. AfreecaTV Co is currently generating about 0.24 per unit of volatility. If you would invest 9,050,000 in AfreecaTV Co on August 29, 2024 and sell it today you would earn a total of 1,640,000 from holding AfreecaTV Co or generate 18.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Busan Industrial Co vs. AfreecaTV Co
Performance |
| Timeline |
| Busan Industrial |
| AfreecaTV |
Busan Industrial and AfreecaTV Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Busan Industrial and AfreecaTV
The main advantage of trading using opposite Busan Industrial and AfreecaTV positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Busan Industrial position performs unexpectedly, AfreecaTV 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 AfreecaTV will offset losses from the drop in AfreecaTV's long position.| Busan Industrial vs. AptaBio Therapeutics | Busan Industrial vs. Daewoo SBI SPAC | Busan Industrial vs. Dream Security co | Busan Industrial vs. Microfriend |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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