Correlation Between Busan Industrial and Grand Korea
Can any of the company-specific risk be diversified away by investing in both Busan Industrial and Grand Korea 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 Grand Korea 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 Grand Korea Leisure, you can compare the effects of market volatilities on Busan Industrial and Grand Korea 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 Grand Korea. Check out your portfolio center. Please also check ongoing floating volatility patterns of Busan Industrial and Grand Korea.
Diversification Opportunities for Busan Industrial and Grand Korea
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Busan and Grand is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Busan Industrial Co and Grand Korea Leisure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grand Korea Leisure 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 Grand Korea. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grand Korea Leisure has no effect on the direction of Busan Industrial i.e., Busan Industrial and Grand Korea go up and down completely randomly.
Pair Corralation between Busan Industrial and Grand Korea
Assuming the 90 days trading horizon Busan Industrial Co is expected to under-perform the Grand Korea. In addition to that, Busan Industrial is 2.8 times more volatile than Grand Korea Leisure. It trades about -0.01 of its total potential returns per unit of risk. Grand Korea Leisure is currently generating about 0.19 per unit of volatility. If you would invest 1,155,000 in Grand Korea Leisure on November 4, 2024 and sell it today you would earn a total of 34,000 from holding Grand Korea Leisure or generate 2.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Busan Industrial Co vs. Grand Korea Leisure
Performance |
| Timeline |
| Busan Industrial |
| Grand Korea Leisure |
Busan Industrial and Grand Korea Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Busan Industrial and Grand Korea
The main advantage of trading using opposite Busan Industrial and Grand Korea positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Busan Industrial position performs unexpectedly, Grand Korea 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 Grand Korea will offset losses from the drop in Grand Korea's long position.| Busan Industrial vs. Leaders Technology Investment | Busan Industrial vs. Korea Investment Holdings | Busan Industrial vs. Golden Bridge Investment | Busan Industrial vs. Sangsangin Investment Securities |
| Grand Korea vs. Seoul Food Industrial | Grand Korea vs. CJ Seafood Corp | Grand Korea vs. SungMoon Electronics Co | Grand Korea vs. ABOV Semiconductor 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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