Correlation Between Busan Industrial and Air Busan
Can any of the company-specific risk be diversified away by investing in both Busan Industrial and Air Busan 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 Air Busan 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 Air Busan Co, you can compare the effects of market volatilities on Busan Industrial and Air Busan 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 Air Busan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Busan Industrial and Air Busan.
Diversification Opportunities for Busan Industrial and Air Busan
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Busan and Air is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Busan Industrial Co and Air Busan Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Busan 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 Air Busan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Busan has no effect on the direction of Busan Industrial i.e., Busan Industrial and Air Busan go up and down completely randomly.
Pair Corralation between Busan Industrial and Air Busan
Assuming the 90 days trading horizon Busan Industrial is expected to generate 1.15 times less return on investment than Air Busan. In addition to that, Busan Industrial is 1.37 times more volatile than Air Busan Co. It trades about 0.17 of its total potential returns per unit of risk. Air Busan Co is currently generating about 0.27 per unit of volatility. If you would invest 223,500 in Air Busan Co on October 26, 2024 and sell it today you would earn a total of 15,500 from holding Air Busan Co or generate 6.94% 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. Air Busan Co
Performance |
| Timeline |
| Busan Industrial |
| Air Busan |
Busan Industrial and Air Busan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Busan Industrial and Air Busan
The main advantage of trading using opposite Busan Industrial and Air Busan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Busan Industrial position performs unexpectedly, Air Busan 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 Air Busan will offset losses from the drop in Air Busan's long position.| Busan Industrial vs. Lotte Data Communication | Busan Industrial vs. Seoyon Topmetal Co | Busan Industrial vs. LEENO Industrial | Busan Industrial vs. Dongil Metal Co |
| Air Busan vs. Jin Air Co | Air Busan vs. Tway Air Co | Air Busan vs. Busan Industrial Co | Air Busan vs. Busan Ind |
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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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