Correlation Between LEENO Industrial and Busan Industrial
Can any of the company-specific risk be diversified away by investing in both LEENO 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 LEENO 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 LEENO Industrial and Busan Industrial Co, you can compare the effects of market volatilities on LEENO 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 LEENO Industrial with a short position of Busan Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of LEENO Industrial and Busan Industrial.
Diversification Opportunities for LEENO Industrial and Busan Industrial
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between LEENO and Busan is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding LEENO 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 LEENO 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 LEENO 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 LEENO Industrial i.e., LEENO Industrial and Busan Industrial go up and down completely randomly.
Pair Corralation between LEENO Industrial and Busan Industrial
Assuming the 90 days trading horizon LEENO Industrial is expected to generate 1.63 times more return on investment than Busan Industrial. However, LEENO Industrial is 1.63 times more volatile than Busan Industrial Co. It trades about 0.21 of its potential returns per unit of risk. Busan Industrial Co is currently generating about 0.17 per unit of risk. If you would invest 19,190,000 in LEENO Industrial on October 26, 2024 and sell it today you would earn a total of 2,260,000 from holding LEENO Industrial or generate 11.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LEENO Industrial vs. Busan Industrial Co
Performance |
| Timeline |
| LEENO Industrial |
| Busan Industrial |
LEENO Industrial and Busan Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LEENO Industrial and Busan Industrial
The main advantage of trading using opposite LEENO Industrial and Busan Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LEENO 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.| LEENO Industrial vs. Tokai Carbon Korea | LEENO Industrial vs. LF Co | LEENO Industrial vs. Koh Young Technology |
| Busan Industrial vs. Lotte Data Communication | Busan Industrial vs. Seoyon Topmetal Co | Busan Industrial vs. LEENO Industrial | Busan Industrial vs. Dongil Metal Co |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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