Correlation Between Haesung Industrial and Busan Industrial
Can any of the company-specific risk be diversified away by investing in both Haesung Industrial 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 Haesung Industrial and Busan Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Haesung Industrial Co and Busan Industrial Co, you can compare the effects of market volatilities on Haesung Industrial 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 Haesung Industrial with a short position of Busan Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Haesung Industrial and Busan Industrial.
Diversification Opportunities for Haesung Industrial and Busan Industrial
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Haesung and Busan is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Haesung Industrial Co and Busan Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Busan Industrial and Haesung 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 Haesung Industrial Co 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 Haesung Industrial i.e., Haesung Industrial and Busan Industrial go up and down completely randomly.
Pair Corralation between Haesung Industrial and Busan Industrial
Assuming the 90 days trading horizon Haesung Industrial Co is expected to under-perform the Busan Industrial. But the stock apears to be less risky and, when comparing its historical volatility, Haesung Industrial Co is 2.23 times less risky than Busan Industrial. The stock trades about -0.1 of its potential returns per unit of risk. The Busan Industrial Co is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 5,140,000 in Busan Industrial Co on August 25, 2024 and sell it today you would earn a total of 360,000 from holding Busan Industrial Co or generate 7.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Haesung Industrial Co vs. Busan Industrial Co
Performance |
| Timeline |
| Haesung Industrial |
| Busan Industrial |
Haesung Industrial and Busan Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Haesung Industrial and Busan Industrial
The main advantage of trading using opposite Haesung Industrial and Busan Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Haesung Industrial 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.| Haesung Industrial vs. Busan Industrial Co | Haesung Industrial vs. Busan Ind | Haesung Industrial vs. Mirae Asset Daewoo | Haesung Industrial vs. UNISEM Co |
| Busan Industrial vs. Taeyang Metal Industrial | Busan Industrial vs. Lake Materials Co | Busan Industrial vs. Asiana Airlines | Busan Industrial vs. Ssangyong Materials 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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