Correlation Between Busan Industrial and KB No4
Can any of the company-specific risk be diversified away by investing in both Busan Industrial and KB No4 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 KB No4 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 KB No4 SPAC, you can compare the effects of market volatilities on Busan Industrial and KB No4 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 KB No4. Check out your portfolio center. Please also check ongoing floating volatility patterns of Busan Industrial and KB No4.
Diversification Opportunities for Busan Industrial and KB No4
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Busan and 205500 is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Busan Industrial Co and KB No4 SPAC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KB No4 SPAC 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 KB No4. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KB No4 SPAC has no effect on the direction of Busan Industrial i.e., Busan Industrial and KB No4 go up and down completely randomly.
Pair Corralation between Busan Industrial and KB No4
Assuming the 90 days trading horizon Busan Industrial Co is expected to generate 1.65 times more return on investment than KB No4. However, Busan Industrial is 1.65 times more volatile than KB No4 SPAC. It trades about 0.01 of its potential returns per unit of risk. KB No4 SPAC is currently generating about -0.08 per unit of risk. If you would invest 6,364,522 in Busan Industrial Co on September 4, 2024 and sell it today you would lose (404,522) from holding Busan Industrial Co or give up 6.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Busan Industrial Co vs. KB No4 SPAC
Performance |
| Timeline |
| Busan Industrial |
| KB No4 SPAC |
Busan Industrial and KB No4 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Busan Industrial and KB No4
The main advantage of trading using opposite Busan Industrial and KB No4 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Busan Industrial position performs unexpectedly, KB No4 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 KB No4 will offset losses from the drop in KB No4's long position.| Busan Industrial vs. AptaBio Therapeutics | Busan Industrial vs. Daewoo SBI SPAC | Busan Industrial vs. Dream Security co | Busan Industrial vs. Microfriend |
| KB No4 vs. Top Material Co | KB No4 vs. Hyundai Engineering Plastics | KB No4 vs. Daejoo Electronic Materials | KB No4 vs. Ecoplastic |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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