Correlation Between Busan Industrial and Seoam Machinery
Can any of the company-specific risk be diversified away by investing in both Busan Industrial and Seoam Machinery 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 Seoam Machinery 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 Seoam Machinery Industry, you can compare the effects of market volatilities on Busan Industrial and Seoam Machinery 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 Seoam Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Busan Industrial and Seoam Machinery.
Diversification Opportunities for Busan Industrial and Seoam Machinery
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Busan and Seoam is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Busan Industrial Co and Seoam Machinery Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seoam Machinery Industry 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 Seoam Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seoam Machinery Industry has no effect on the direction of Busan Industrial i.e., Busan Industrial and Seoam Machinery go up and down completely randomly.
Pair Corralation between Busan Industrial and Seoam Machinery
Assuming the 90 days trading horizon Busan Industrial Co is expected to under-perform the Seoam Machinery. In addition to that, Busan Industrial is 2.42 times more volatile than Seoam Machinery Industry. It trades about -0.09 of its total potential returns per unit of risk. Seoam Machinery Industry is currently generating about -0.17 per unit of volatility. If you would invest 380,500 in Seoam Machinery Industry on November 7, 2024 and sell it today you would lose (17,500) from holding Seoam Machinery Industry or give up 4.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Busan Industrial Co vs. Seoam Machinery Industry
Performance |
| Timeline |
| Busan Industrial |
| Seoam Machinery Industry |
Busan Industrial and Seoam Machinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Busan Industrial and Seoam Machinery
The main advantage of trading using opposite Busan Industrial and Seoam Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Busan Industrial position performs unexpectedly, Seoam Machinery 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 Seoam Machinery will offset losses from the drop in Seoam Machinery's long position.| Busan Industrial vs. TK Chemical | Busan Industrial vs. Kyung In Synthetic Corp | Busan Industrial vs. Daejung Chemicals Metals | Busan Industrial vs. Kg Chemical |
| Seoam Machinery vs. Lotte Data Communication | Seoam Machinery vs. Ssangyong Information Communication | Seoam Machinery vs. Innowireless Co | Seoam Machinery vs. Hankook Steel 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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