Correlation Between Korea Alcohol and Busan Industrial
Can any of the company-specific risk be diversified away by investing in both Korea Alcohol and Busan Industrial 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 Korea Alcohol and Busan Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea Alcohol Industrial and Busan Industrial Co, you can compare the effects of market volatilities on Korea Alcohol and Busan Industrial 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 Korea Alcohol with a short position of Busan Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Alcohol and Busan Industrial.
Diversification Opportunities for Korea Alcohol and Busan Industrial
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Korea and Busan is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Korea Alcohol Industrial and Busan Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Busan Industrial and Korea Alcohol 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 Korea Alcohol Industrial are associated (or correlated) with Busan Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Busan Industrial has no effect on the direction of Korea Alcohol i.e., Korea Alcohol and Busan Industrial go up and down completely randomly.
Pair Corralation between Korea Alcohol and Busan Industrial
Assuming the 90 days trading horizon Korea Alcohol Industrial is expected to under-perform the Busan Industrial. But the stock apears to be less risky and, when comparing its historical volatility, Korea Alcohol Industrial is 4.08 times less risky than Busan Industrial. The stock trades about -0.04 of its potential returns per unit of risk. The Busan Industrial Co is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 4,973,411 in Busan Industrial Co on October 18, 2024 and sell it today you would earn a total of 2,916,589 from holding Busan Industrial Co or generate 58.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Alcohol Industrial vs. Busan Industrial Co
Performance |
| Timeline |
| Korea Alcohol Industrial |
| Busan Industrial |
Korea Alcohol and Busan Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Alcohol and Busan Industrial
The main advantage of trading using opposite Korea Alcohol and Busan Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Alcohol position performs unexpectedly, Busan Industrial 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 Busan Industrial will offset losses from the drop in Busan Industrial's long position.| Korea Alcohol vs. iNtRON Biotechnology | Korea Alcohol vs. FNSTech Co | Korea Alcohol vs. SEOWONINTECHCoLtd | Korea Alcohol vs. Vitzro Tech Co |
| Busan Industrial vs. Hanjin Transportation Co | Busan Industrial vs. Korea Alcohol Industrial | Busan Industrial vs. SV Investment | Busan Industrial vs. Woori Technology Investment |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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