Correlation Between ECSTELECOM and Busan Industrial
Can any of the company-specific risk be diversified away by investing in both ECSTELECOM 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 ECSTELECOM and Busan Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ECSTELECOM Co and Busan Industrial Co, you can compare the effects of market volatilities on ECSTELECOM 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 ECSTELECOM with a short position of Busan Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of ECSTELECOM and Busan Industrial.
Diversification Opportunities for ECSTELECOM and Busan Industrial
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ECSTELECOM and Busan is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding ECSTELECOM 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 ECSTELECOM 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 ECSTELECOM 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 ECSTELECOM i.e., ECSTELECOM and Busan Industrial go up and down completely randomly.
Pair Corralation between ECSTELECOM and Busan Industrial
Assuming the 90 days trading horizon ECSTELECOM Co is expected to under-perform the Busan Industrial. But the stock apears to be less risky and, when comparing its historical volatility, ECSTELECOM Co is 1.8 times less risky than Busan Industrial. The stock trades about -0.24 of its potential returns per unit of risk. The Busan Industrial Co is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 7,650,000 in Busan Industrial Co on November 7, 2024 and sell it today you would earn a total of 50,000 from holding Busan Industrial Co or generate 0.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ECSTELECOM Co vs. Busan Industrial Co
Performance |
| Timeline |
| ECSTELECOM |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Busan Industrial |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
ECSTELECOM and Busan Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ECSTELECOM and Busan Industrial
The main advantage of trading using opposite ECSTELECOM and Busan Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ECSTELECOM 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.| ECSTELECOM vs. Next Entertainment World | ECSTELECOM vs. Seers Technology | ECSTELECOM vs. Woori Technology | ECSTELECOM vs. Cots Technology Co |
| Busan Industrial vs. Raontech | Busan Industrial vs. V One Tech Co | Busan Industrial vs. A Tech Solution Co | Busan Industrial vs. Daehan Synthetic Fiber |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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