Correlation Between NICE Information and Busan Industrial
Can any of the company-specific risk be diversified away by investing in both NICE Information 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 NICE Information and Busan Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NICE Information Service and Busan Industrial Co, you can compare the effects of market volatilities on NICE Information 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 NICE Information with a short position of Busan Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of NICE Information and Busan Industrial.
Diversification Opportunities for NICE Information and Busan Industrial
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NICE and Busan is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding NICE Information Service and Busan Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Busan Industrial and NICE Information 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 NICE Information Service 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 NICE Information i.e., NICE Information and Busan Industrial go up and down completely randomly.
Pair Corralation between NICE Information and Busan Industrial
Assuming the 90 days trading horizon NICE Information Service is expected to generate 0.42 times more return on investment than Busan Industrial. However, NICE Information Service is 2.38 times less risky than Busan Industrial. It trades about 0.07 of its potential returns per unit of risk. Busan Industrial Co is currently generating about -0.02 per unit of risk. If you would invest 1,152,000 in NICE Information Service on October 12, 2024 and sell it today you would earn a total of 24,000 from holding NICE Information Service or generate 2.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NICE Information Service vs. Busan Industrial Co
Performance |
| Timeline |
| NICE Information Service |
| Busan Industrial |
NICE Information and Busan Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NICE Information and Busan Industrial
The main advantage of trading using opposite NICE Information and Busan Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NICE Information 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.| NICE Information vs. Shinsegae Engineering Construction | NICE Information vs. KT Submarine Telecom | NICE Information vs. Dongbang Ship Machinery | NICE Information vs. Seoul Electronics Telecom |
| Busan Industrial vs. DataSolution | Busan Industrial vs. Samyang Foods Co | Busan Industrial vs. Haitai Confectionery Foods | Busan Industrial vs. NICE Information Service |
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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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