Correlation Between Busan Industrial and Hanilcmt
Can any of the company-specific risk be diversified away by investing in both Busan Industrial and Hanilcmt 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 Hanilcmt 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 Hanilcmt Co, you can compare the effects of market volatilities on Busan Industrial and Hanilcmt 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 Hanilcmt. Check out your portfolio center. Please also check ongoing floating volatility patterns of Busan Industrial and Hanilcmt.
Diversification Opportunities for Busan Industrial and Hanilcmt
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Busan and Hanilcmt is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Busan Industrial Co and Hanilcmt Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanilcmt 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 Hanilcmt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanilcmt has no effect on the direction of Busan Industrial i.e., Busan Industrial and Hanilcmt go up and down completely randomly.
Pair Corralation between Busan Industrial and Hanilcmt
Assuming the 90 days trading horizon Busan Industrial Co is expected to generate 0.71 times more return on investment than Hanilcmt. However, Busan Industrial Co is 1.41 times less risky than Hanilcmt. It trades about 0.15 of its potential returns per unit of risk. Hanilcmt Co is currently generating about 0.1 per unit of risk. If you would invest 7,754,136 in Busan Industrial Co on October 20, 2024 and sell it today you would earn a total of 355,864 from holding Busan Industrial Co or generate 4.59% 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. Hanilcmt Co
Performance |
| Timeline |
| Busan Industrial |
| Hanilcmt |
Busan Industrial and Hanilcmt Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Busan Industrial and Hanilcmt
The main advantage of trading using opposite Busan Industrial and Hanilcmt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Busan Industrial position performs unexpectedly, Hanilcmt 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 Hanilcmt will offset losses from the drop in Hanilcmt's long position.| Busan Industrial vs. Digital Power Communications | Busan Industrial vs. Bookook Steel | Busan Industrial vs. Samsung Life Insurance | Busan Industrial vs. Korea Information Communications |
| Hanilcmt vs. Posco Chemical Co | Hanilcmt vs. SK Hynix | Hanilcmt vs. NSN Co | Hanilcmt vs. JYP Entertainment Corp |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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