Correlation Between Dong A and Busan Ind
Can any of the company-specific risk be diversified away by investing in both Dong A and Busan Ind 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 Dong A and Busan Ind into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dong A Steel Technology and Busan Ind, you can compare the effects of market volatilities on Dong A and Busan Ind 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 Dong A with a short position of Busan Ind. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dong A and Busan Ind.
Diversification Opportunities for Dong A and Busan Ind
Excellent diversification
The 3 months correlation between Dong and Busan is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Dong A Steel Technology and Busan Ind in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Busan Ind and Dong A 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 Dong A Steel Technology are associated (or correlated) with Busan Ind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Busan Ind has no effect on the direction of Dong A i.e., Dong A and Busan Ind go up and down completely randomly.
Pair Corralation between Dong A and Busan Ind
Assuming the 90 days trading horizon Dong A Steel Technology is expected to under-perform the Busan Ind. But the stock apears to be less risky and, when comparing its historical volatility, Dong A Steel Technology is 1.21 times less risky than Busan Ind. The stock trades about -0.01 of its potential returns per unit of risk. The Busan Ind is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 6,050,000 in Busan Ind on October 18, 2024 and sell it today you would earn a total of 1,840,000 from holding Busan Ind or generate 30.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dong A Steel Technology vs. Busan Ind
Performance |
| Timeline |
| Dong A Steel |
| Busan Ind |
Dong A and Busan Ind Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dong A and Busan Ind
The main advantage of trading using opposite Dong A and Busan Ind positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dong A position performs unexpectedly, Busan Ind 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 Ind will offset losses from the drop in Busan Ind's long position.| Dong A vs. Sung Bo Chemicals | Dong A vs. JC Chemical Co | Dong A vs. Hanwha Chemical Corp | Dong A vs. Nh Investment And |
| Busan Ind vs. Dong A Steel Technology | Busan Ind vs. Tuksu Engineering ConstructionLtd | Busan Ind vs. Shin Steel Co | Busan Ind vs. Moonbae Steel |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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