Correlation Between Busan Industrial and KODEX Bond
Can any of the company-specific risk be diversified away by investing in both Busan Industrial and KODEX Bond 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 KODEX Bond 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 KODEX Bond SRI, you can compare the effects of market volatilities on Busan Industrial and KODEX Bond 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 KODEX Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Busan Industrial and KODEX Bond.
Diversification Opportunities for Busan Industrial and KODEX Bond
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Busan and KODEX is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Busan Industrial Co and KODEX Bond SRI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KODEX Bond SRI 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 KODEX Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KODEX Bond SRI has no effect on the direction of Busan Industrial i.e., Busan Industrial and KODEX Bond go up and down completely randomly.
Pair Corralation between Busan Industrial and KODEX Bond
Assuming the 90 days trading horizon Busan Industrial Co is expected to generate 6.43 times more return on investment than KODEX Bond. However, Busan Industrial is 6.43 times more volatile than KODEX Bond SRI. It trades about 0.15 of its potential returns per unit of risk. KODEX Bond SRI is currently generating about 0.05 per unit of risk. If you would invest 7,694,335 in Busan Industrial Co on October 25, 2024 and sell it today you would earn a total of 395,665 from holding Busan Industrial Co or generate 5.14% 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. KODEX Bond SRI
Performance |
| Timeline |
| Busan Industrial |
| KODEX Bond SRI |
Busan Industrial and KODEX Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Busan Industrial and KODEX Bond
The main advantage of trading using opposite Busan Industrial and KODEX Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Busan Industrial position performs unexpectedly, KODEX Bond 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 KODEX Bond will offset losses from the drop in KODEX Bond's long position.| Busan Industrial vs. KB Financial Group | Busan Industrial vs. Shinhan Financial Group | Busan Industrial vs. Hana Financial | Busan Industrial vs. Woori Financial Group |
| KODEX Bond vs. Busan Industrial Co | KODEX Bond vs. Busan Ind | KODEX Bond vs. Mirae Asset Daewoo | KODEX Bond 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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