Correlation Between Busan Industrial and Global Standard
Can any of the company-specific risk be diversified away by investing in both Busan Industrial and Global Standard 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 Global Standard 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 Global Standard Technology, you can compare the effects of market volatilities on Busan Industrial and Global Standard 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 Global Standard. Check out your portfolio center. Please also check ongoing floating volatility patterns of Busan Industrial and Global Standard.
Diversification Opportunities for Busan Industrial and Global Standard
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Busan and Global is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Busan Industrial Co and Global Standard Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Standard Tech 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 Global Standard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Standard Tech has no effect on the direction of Busan Industrial i.e., Busan Industrial and Global Standard go up and down completely randomly.
Pair Corralation between Busan Industrial and Global Standard
Assuming the 90 days trading horizon Busan Industrial Co is expected to under-perform the Global Standard. In addition to that, Busan Industrial is 1.42 times more volatile than Global Standard Technology. It trades about -0.02 of its total potential returns per unit of risk. Global Standard Technology is currently generating about 0.29 per unit of volatility. If you would invest 1,547,240 in Global Standard Technology on October 12, 2024 and sell it today you would earn a total of 265,760 from holding Global Standard Technology or generate 17.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Busan Industrial Co vs. Global Standard Technology
Performance |
| Timeline |
| Busan Industrial |
| Global Standard Tech |
Busan Industrial and Global Standard Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Busan Industrial and Global Standard
The main advantage of trading using opposite Busan Industrial and Global Standard positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Busan Industrial position performs unexpectedly, Global Standard 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 Global Standard will offset losses from the drop in Global Standard's long position.| Busan Industrial vs. LG Chemicals | Busan Industrial vs. Korean Reinsurance Co | Busan Industrial vs. Jeju Bank | Busan Industrial vs. Lotte Chilsung Beverage |
| Global Standard vs. KMH Hitech Co | Global Standard vs. GemVaxKAEL CoLtd | Global Standard vs. Bosung Power Technology | Global Standard vs. Busan Industrial 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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