Correlation Between Seegene and Busan Ind
Can any of the company-specific risk be diversified away by investing in both Seegene 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 Seegene and Busan Ind into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Seegene and Busan Ind, you can compare the effects of market volatilities on Seegene 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 Seegene with a short position of Busan Ind. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seegene and Busan Ind.
Diversification Opportunities for Seegene and Busan Ind
Very good diversification
The 3 months correlation between Seegene and Busan is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Seegene and Busan Ind in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Busan Ind and Seegene 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 Seegene 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 Seegene i.e., Seegene and Busan Ind go up and down completely randomly.
Pair Corralation between Seegene and Busan Ind
Assuming the 90 days trading horizon Seegene is expected to under-perform the Busan Ind. But the stock apears to be less risky and, when comparing its historical volatility, Seegene is 2.29 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 0.04 of returns per unit of risk over similar time horizon. If you would invest 5,380,000 in Busan Ind on August 25, 2024 and sell it today you would earn a total of 120,000 from holding Busan Ind or generate 2.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Seegene vs. Busan Ind
Performance |
| Timeline |
| Seegene |
| Busan Ind |
Seegene and Busan Ind Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seegene and Busan Ind
The main advantage of trading using opposite Seegene and Busan Ind positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seegene 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.The idea behind Seegene and Busan Ind pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Busan Ind vs. GS Retail Co | Busan Ind vs. Playgram Co | Busan Ind vs. Taeyang Metal Industrial | Busan Ind vs. Cheryong Industrial CoLtd |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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