Correlation Between INSUN Environmental and Barunson Entertainment
Can any of the company-specific risk be diversified away by investing in both INSUN Environmental and Barunson Entertainment 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 INSUN Environmental and Barunson Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between INSUN Environmental New and Barunson Entertainment Arts, you can compare the effects of market volatilities on INSUN Environmental and Barunson Entertainment 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 INSUN Environmental with a short position of Barunson Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of INSUN Environmental and Barunson Entertainment.
Diversification Opportunities for INSUN Environmental and Barunson Entertainment
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between INSUN and Barunson is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding INSUN Environmental New and Barunson Entertainment Arts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barunson Entertainment and INSUN Environmental 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 INSUN Environmental New are associated (or correlated) with Barunson Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barunson Entertainment has no effect on the direction of INSUN Environmental i.e., INSUN Environmental and Barunson Entertainment go up and down completely randomly.
Pair Corralation between INSUN Environmental and Barunson Entertainment
Assuming the 90 days trading horizon INSUN Environmental New is expected to under-perform the Barunson Entertainment. But the stock apears to be less risky and, when comparing its historical volatility, INSUN Environmental New is 1.16 times less risky than Barunson Entertainment. The stock trades about -0.06 of its potential returns per unit of risk. The Barunson Entertainment Arts is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 53,100 in Barunson Entertainment Arts on October 13, 2024 and sell it today you would lose (8,900) from holding Barunson Entertainment Arts or give up 16.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
INSUN Environmental New vs. Barunson Entertainment Arts
Performance |
| Timeline |
| INSUN Environmental New |
| Barunson Entertainment |
INSUN Environmental and Barunson Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INSUN Environmental and Barunson Entertainment
The main advantage of trading using opposite INSUN Environmental and Barunson Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INSUN Environmental position performs unexpectedly, Barunson Entertainment 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 Barunson Entertainment will offset losses from the drop in Barunson Entertainment's long position.| INSUN Environmental vs. Korea Environment Technology | INSUN Environmental vs. Paradise Co | INSUN Environmental vs. Seoul Semiconductor Co | INSUN Environmental vs. JUSUNG ENGINEERING Co |
| Barunson Entertainment vs. E Investment Development | Barunson Entertainment vs. TS Investment Corp | Barunson Entertainment vs. KTB Investment Securities | Barunson Entertainment vs. INSUN Environmental New |
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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