Correlation Between Busan Industrial and Hanwha ARIRANG
Can any of the company-specific risk be diversified away by investing in both Busan Industrial and Hanwha ARIRANG 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 Hanwha ARIRANG 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 Hanwha ARIRANG SP, you can compare the effects of market volatilities on Busan Industrial and Hanwha ARIRANG 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 Hanwha ARIRANG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Busan Industrial and Hanwha ARIRANG.
Diversification Opportunities for Busan Industrial and Hanwha ARIRANG
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Busan and Hanwha is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Busan Industrial Co and Hanwha ARIRANG SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanwha ARIRANG SP 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 Hanwha ARIRANG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanwha ARIRANG SP has no effect on the direction of Busan Industrial i.e., Busan Industrial and Hanwha ARIRANG go up and down completely randomly.
Pair Corralation between Busan Industrial and Hanwha ARIRANG
Assuming the 90 days trading horizon Busan Industrial Co is expected to generate 6.75 times more return on investment than Hanwha ARIRANG. However, Busan Industrial is 6.75 times more volatile than Hanwha ARIRANG SP. It trades about 0.1 of its potential returns per unit of risk. Hanwha ARIRANG SP is currently generating about 0.19 per unit of risk. If you would invest 5,470,000 in Busan Industrial Co on September 2, 2024 and sell it today you would earn a total of 670,000 from holding Busan Industrial Co or generate 12.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Busan Industrial Co vs. Hanwha ARIRANG SP
Performance |
| Timeline |
| Busan Industrial |
| Hanwha ARIRANG SP |
Busan Industrial and Hanwha ARIRANG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Busan Industrial and Hanwha ARIRANG
The main advantage of trading using opposite Busan Industrial and Hanwha ARIRANG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Busan Industrial position performs unexpectedly, Hanwha ARIRANG 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 Hanwha ARIRANG will offset losses from the drop in Hanwha ARIRANG's long position.| Busan Industrial vs. AptaBio Therapeutics | Busan Industrial vs. Daewoo SBI SPAC | Busan Industrial vs. Dream Security co | Busan Industrial vs. Microfriend |
| Hanwha ARIRANG vs. Busan Industrial Co | Hanwha ARIRANG vs. Busan Ind | Hanwha ARIRANG vs. Mirae Asset Daewoo | Hanwha ARIRANG vs. Shinhan WTI Futures |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
Other Complementary Tools
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges |