Correlation Between Busan Industrial and GeneBioTech
Can any of the company-specific risk be diversified away by investing in both Busan Industrial and GeneBioTech 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 GeneBioTech 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 GeneBioTech Co, you can compare the effects of market volatilities on Busan Industrial and GeneBioTech 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 GeneBioTech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Busan Industrial and GeneBioTech.
Diversification Opportunities for Busan Industrial and GeneBioTech
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Busan and GeneBioTech is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Busan Industrial Co and GeneBioTech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GeneBioTech 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 GeneBioTech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GeneBioTech has no effect on the direction of Busan Industrial i.e., Busan Industrial and GeneBioTech go up and down completely randomly.
Pair Corralation between Busan Industrial and GeneBioTech
Assuming the 90 days trading horizon Busan Industrial Co is expected to generate 1.57 times more return on investment than GeneBioTech. However, Busan Industrial is 1.57 times more volatile than GeneBioTech Co. It trades about 0.02 of its potential returns per unit of risk. GeneBioTech Co is currently generating about -0.01 per unit of risk. If you would invest 7,051,770 in Busan Industrial Co on September 22, 2024 and sell it today you would earn a total of 808,230 from holding Busan Industrial Co or generate 11.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
Busan Industrial Co vs. GeneBioTech Co
Performance |
| Timeline |
| Busan Industrial |
| GeneBioTech |
Busan Industrial and GeneBioTech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Busan Industrial and GeneBioTech
The main advantage of trading using opposite Busan Industrial and GeneBioTech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Busan Industrial position performs unexpectedly, GeneBioTech 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 GeneBioTech will offset losses from the drop in GeneBioTech'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 |
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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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