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
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between ECSTELECOM and Busan is 0.28. 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 is expected to generate 1.03 times less return on investment than Busan Industrial. But when comparing it to its historical volatility, ECSTELECOM Co is 2.97 times less risky than Busan Industrial. It trades about 0.12 of its potential returns per unit of risk. Busan Industrial Co is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 5,380,000 in Busan Industrial Co on August 25, 2024 and sell it today you would earn a total of 120,000 from holding Busan Industrial Co or generate 2.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ECSTELECOM Co vs. Busan Industrial Co
Performance |
| Timeline |
| ECSTELECOM |
| Busan Industrial |
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. Busan Industrial Co | ECSTELECOM vs. Busan Ind | ECSTELECOM vs. Mirae Asset Daewoo | ECSTELECOM vs. UNISEM Co |
| Busan Industrial vs. Cuckoo Electronics Co | Busan Industrial vs. Samwha Electronics Co | Busan Industrial vs. Sungwoo Electronics Co | Busan Industrial vs. Atinum Investment 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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