Correlation Between Busan Industrial and Hyundai Industrial
Can any of the company-specific risk be diversified away by investing in both Busan Industrial and Hyundai 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 Hyundai 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 Hyundai Industrial Co, you can compare the effects of market volatilities on Busan Industrial and Hyundai 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 Hyundai Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Busan Industrial and Hyundai Industrial.
Diversification Opportunities for Busan Industrial and Hyundai Industrial
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Busan and Hyundai is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Busan Industrial Co and Hyundai Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Industrial 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 Hyundai Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyundai Industrial has no effect on the direction of Busan Industrial i.e., Busan Industrial and Hyundai Industrial go up and down completely randomly.
Pair Corralation between Busan Industrial and Hyundai Industrial
Assuming the 90 days trading horizon Busan Industrial Co is expected to generate 3.71 times more return on investment than Hyundai Industrial. However, Busan Industrial is 3.71 times more volatile than Hyundai Industrial Co. It trades about 0.09 of its potential returns per unit of risk. Hyundai Industrial Co is currently generating about -0.08 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 | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Busan Industrial Co vs. Hyundai Industrial Co
Performance |
| Timeline |
| Busan Industrial |
| Hyundai Industrial |
Busan Industrial and Hyundai Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Busan Industrial and Hyundai Industrial
The main advantage of trading using opposite Busan Industrial and Hyundai Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Busan Industrial position performs unexpectedly, Hyundai 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 Hyundai Industrial will offset losses from the drop in Hyundai 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 |
| Hyundai Industrial vs. Busan Industrial Co | Hyundai Industrial vs. Busan Ind | Hyundai Industrial vs. Mirae Asset Daewoo | Hyundai Industrial vs. UNISEM 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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