Correlation Between Busan Industrial and JC Chemical
Can any of the company-specific risk be diversified away by investing in both Busan Industrial and JC Chemical 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 JC Chemical 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 JC Chemical Co, you can compare the effects of market volatilities on Busan Industrial and JC Chemical 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 JC Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Busan Industrial and JC Chemical.
Diversification Opportunities for Busan Industrial and JC Chemical
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Busan and 137950 is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Busan Industrial Co and JC Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JC Chemical 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 JC Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JC Chemical has no effect on the direction of Busan Industrial i.e., Busan Industrial and JC Chemical go up and down completely randomly.
Pair Corralation between Busan Industrial and JC Chemical
Assuming the 90 days trading horizon Busan Industrial Co is expected to generate 1.98 times more return on investment than JC Chemical. However, Busan Industrial is 1.98 times more volatile than JC Chemical Co. It trades about 0.1 of its potential returns per unit of risk. JC Chemical Co is currently generating about -0.16 per unit of risk. If you would invest 5,480,000 in Busan Industrial Co on September 3, 2024 and sell it today you would earn a total of 660,000 from holding Busan Industrial Co or generate 12.04% 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. JC Chemical Co
Performance |
| Timeline |
| Busan Industrial |
| JC Chemical |
Busan Industrial and JC Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Busan Industrial and JC Chemical
The main advantage of trading using opposite Busan Industrial and JC Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Busan Industrial position performs unexpectedly, JC Chemical 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 JC Chemical will offset losses from the drop in JC Chemical's long position.| Busan Industrial vs. Pureun Mutual Savings | Busan Industrial vs. Atinum Investment Co | Busan Industrial vs. Korea Investment Holdings | Busan Industrial vs. Hanjoo Light Metal |
| JC Chemical vs. Busan Industrial Co | JC Chemical vs. UNISEM Co | JC Chemical vs. RPBio Inc | JC Chemical vs. Finebesteel |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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