Correlation Between Busan Industrial and Cheryong Industrial
Can any of the company-specific risk be diversified away by investing in both Busan Industrial and Cheryong Industrial 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 Cheryong Industrial 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 Cheryong Industrial CoLtd, you can compare the effects of market volatilities on Busan Industrial and Cheryong Industrial 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 Cheryong Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Busan Industrial and Cheryong Industrial.
Diversification Opportunities for Busan Industrial and Cheryong Industrial
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Busan and Cheryong is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Busan Industrial Co and Cheryong Industrial CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cheryong Industrial CoLtd 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 Cheryong Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cheryong Industrial CoLtd has no effect on the direction of Busan Industrial i.e., Busan Industrial and Cheryong Industrial go up and down completely randomly.
Pair Corralation between Busan Industrial and Cheryong Industrial
Assuming the 90 days trading horizon Busan Industrial Co is expected to generate 1.57 times more return on investment than Cheryong Industrial. However, Busan Industrial is 1.57 times more volatile than Cheryong Industrial CoLtd. It trades about 0.09 of its potential returns per unit of risk. Cheryong Industrial CoLtd is currently generating about -0.09 per unit of risk. If you would invest 5,280,000 in Busan Industrial Co on August 28, 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. Cheryong Industrial CoLtd
Performance |
| Timeline |
| Busan Industrial |
| Cheryong Industrial CoLtd |
Busan Industrial and Cheryong Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Busan Industrial and Cheryong Industrial
The main advantage of trading using opposite Busan Industrial and Cheryong Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Busan Industrial position performs unexpectedly, Cheryong Industrial 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 Cheryong Industrial will offset losses from the drop in Cheryong Industrial's 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 |
| Cheryong Industrial vs. iNtRON Biotechnology | Cheryong Industrial vs. Samsung Life Insurance | Cheryong Industrial vs. InfoBank | Cheryong Industrial vs. Lotte Chilsung Beverage |
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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