Correlation Between Busan Industrial and Daejung Chemicals
Can any of the company-specific risk be diversified away by investing in both Busan Industrial and Daejung Chemicals 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 Daejung Chemicals 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 Daejung Chemicals Metals, you can compare the effects of market volatilities on Busan Industrial and Daejung Chemicals 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 Daejung Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Busan Industrial and Daejung Chemicals.
Diversification Opportunities for Busan Industrial and Daejung Chemicals
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Busan and Daejung is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Busan Industrial Co and Daejung Chemicals Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daejung Chemicals Metals 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 Daejung Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daejung Chemicals Metals has no effect on the direction of Busan Industrial i.e., Busan Industrial and Daejung Chemicals go up and down completely randomly.
Pair Corralation between Busan Industrial and Daejung Chemicals
Assuming the 90 days trading horizon Busan Industrial Co is expected to generate 3.14 times more return on investment than Daejung Chemicals. However, Busan Industrial is 3.14 times more volatile than Daejung Chemicals Metals. It trades about 0.09 of its potential returns per unit of risk. Daejung Chemicals Metals is currently generating about -0.16 per unit of risk. If you would invest 5,280,000 in Busan Industrial Co on August 29, 2024 and sell it today you would earn a total of 400,000 from holding Busan Industrial Co or generate 7.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Busan Industrial Co vs. Daejung Chemicals Metals
Performance |
| Timeline |
| Busan Industrial |
| Daejung Chemicals Metals |
Busan Industrial and Daejung Chemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Busan Industrial and Daejung Chemicals
The main advantage of trading using opposite Busan Industrial and Daejung Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Busan Industrial position performs unexpectedly, Daejung Chemicals 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 Daejung Chemicals will offset losses from the drop in Daejung Chemicals' long position.| Busan Industrial vs. Sangsin Energy Display | Busan Industrial vs. Inzi Display CoLtd | Busan Industrial vs. Top Material Co | Busan Industrial vs. Ssangyong Materials Corp |
| Daejung Chemicals vs. Dong A Steel Technology | Daejung Chemicals vs. Ni Steel | Daejung Chemicals vs. Jeju Semiconductor Corp | Daejung Chemicals 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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