Correlation Between Poongsan and Busan Ind
Can any of the company-specific risk be diversified away by investing in both Poongsan 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 Poongsan and Busan Ind into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Poongsan and Busan Ind, you can compare the effects of market volatilities on Poongsan 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 Poongsan with a short position of Busan Ind. Check out your portfolio center. Please also check ongoing floating volatility patterns of Poongsan and Busan Ind.
Diversification Opportunities for Poongsan and Busan Ind
Excellent diversification
The 3 months correlation between Poongsan and Busan is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Poongsan and Busan Ind in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Busan Ind and Poongsan 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 Poongsan 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 Poongsan i.e., Poongsan and Busan Ind go up and down completely randomly.
Pair Corralation between Poongsan and Busan Ind
Assuming the 90 days trading horizon Poongsan is expected to under-perform the Busan Ind. But the stock apears to be less risky and, when comparing its historical volatility, Poongsan is 2.39 times less risky than Busan Ind. The stock trades about -0.09 of its potential returns per unit of risk. The Busan Ind is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 5,630,000 in Busan Ind on September 25, 2024 and sell it today you would earn a total of 2,090,000 from holding Busan Ind or generate 37.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Poongsan vs. Busan Ind
Performance |
| Timeline |
| Poongsan |
| Busan Ind |
Poongsan and Busan Ind Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Poongsan and Busan Ind
The main advantage of trading using opposite Poongsan and Busan Ind positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Poongsan 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.| Poongsan vs. LG Chemicals | Poongsan vs. POSCO Holdings | Poongsan vs. Hanwha Solutions | Poongsan vs. Lotte Chemical Corp |
| Busan Ind vs. Woorim Machinery Co | Busan Ind vs. CU Medical Systems | Busan Ind vs. Hyundai Engineering Construction | Busan Ind vs. Seoul Food Industrial |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
Other Complementary Tools
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets |