Correlation Between Busan Industrial and Hwashin Precision
Can any of the company-specific risk be diversified away by investing in both Busan Industrial and Hwashin Precision 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 Hwashin Precision 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 Hwashin Precision Engineering, you can compare the effects of market volatilities on Busan Industrial and Hwashin Precision 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 Hwashin Precision. Check out your portfolio center. Please also check ongoing floating volatility patterns of Busan Industrial and Hwashin Precision.
Diversification Opportunities for Busan Industrial and Hwashin Precision
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Busan and Hwashin is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Busan Industrial Co and Hwashin Precision Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hwashin Precision 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 Hwashin Precision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hwashin Precision has no effect on the direction of Busan Industrial i.e., Busan Industrial and Hwashin Precision go up and down completely randomly.
Pair Corralation between Busan Industrial and Hwashin Precision
Assuming the 90 days trading horizon Busan Industrial is expected to generate 3.59 times less return on investment than Hwashin Precision. In addition to that, Busan Industrial is 1.31 times more volatile than Hwashin Precision Engineering. It trades about 0.11 of its total potential returns per unit of risk. Hwashin Precision Engineering is currently generating about 0.5 per unit of volatility. If you would invest 104,629 in Hwashin Precision Engineering on October 9, 2024 and sell it today you would earn a total of 40,371 from holding Hwashin Precision Engineering or generate 38.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
Busan Industrial Co vs. Hwashin Precision Engineering
Performance |
| Timeline |
| Busan Industrial |
| Hwashin Precision |
Busan Industrial and Hwashin Precision Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Busan Industrial and Hwashin Precision
The main advantage of trading using opposite Busan Industrial and Hwashin Precision positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Busan Industrial position performs unexpectedly, Hwashin Precision 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 Hwashin Precision will offset losses from the drop in Hwashin Precision's long position.| Busan Industrial vs. Digital Power Communications | Busan Industrial vs. Display Tech Co | Busan Industrial vs. iNtRON Biotechnology | Busan Industrial vs. Ssangyong Information Communication |
| Hwashin Precision vs. Woori Technology Investment | Hwashin Precision vs. Jeju Semiconductor Corp | Hwashin Precision vs. Atinum Investment Co | Hwashin Precision vs. Samyung Trading 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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