Correlation Between Busan Industrial and Shinhan WTI
Can any of the company-specific risk be diversified away by investing in both Busan Industrial and Shinhan WTI 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 Shinhan WTI 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 Shinhan WTI Futures, you can compare the effects of market volatilities on Busan Industrial and Shinhan WTI 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 Shinhan WTI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Busan Industrial and Shinhan WTI.
Diversification Opportunities for Busan Industrial and Shinhan WTI
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Busan and Shinhan is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Busan Industrial Co and Shinhan WTI Futures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinhan WTI Futures 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 Shinhan WTI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shinhan WTI Futures has no effect on the direction of Busan Industrial i.e., Busan Industrial and Shinhan WTI go up and down completely randomly.
Pair Corralation between Busan Industrial and Shinhan WTI
Assuming the 90 days trading horizon Busan Industrial Co is expected to generate 3.38 times more return on investment than Shinhan WTI. However, Busan Industrial is 3.38 times more volatile than Shinhan WTI Futures. It trades about 0.06 of its potential returns per unit of risk. Shinhan WTI Futures is currently generating about 0.1 per unit of risk. If you would invest 5,280,000 in Busan Industrial Co on August 27, 2024 and sell it today you would earn a total of 220,000 from holding Busan Industrial Co or generate 4.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Busan Industrial Co vs. Shinhan WTI Futures
Performance |
| Timeline |
| Busan Industrial |
| Shinhan WTI Futures |
Busan Industrial and Shinhan WTI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Busan Industrial and Shinhan WTI
The main advantage of trading using opposite Busan Industrial and Shinhan WTI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Busan Industrial position performs unexpectedly, Shinhan WTI 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 Shinhan WTI will offset losses from the drop in Shinhan WTI's long position.| Busan Industrial vs. AptaBio Therapeutics | Busan Industrial vs. Daewoo SBI SPAC | Busan Industrial vs. Dream Security co | Busan Industrial vs. Microfriend |
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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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