Correlation Between TK Chemical and Busan Industrial
Can any of the company-specific risk be diversified away by investing in both TK Chemical 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 TK Chemical and Busan Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TK Chemical and Busan Industrial Co, you can compare the effects of market volatilities on TK Chemical 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 TK Chemical with a short position of Busan Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of TK Chemical and Busan Industrial.
Diversification Opportunities for TK Chemical and Busan Industrial
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 104480 and Busan is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding TK Chemical and Busan Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Busan Industrial and TK Chemical 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 TK Chemical 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 TK Chemical i.e., TK Chemical and Busan Industrial go up and down completely randomly.
Pair Corralation between TK Chemical and Busan Industrial
Assuming the 90 days trading horizon TK Chemical is expected to under-perform the Busan Industrial. In addition to that, TK Chemical is 1.01 times more volatile than Busan Industrial Co. It trades about -0.07 of its total potential returns per unit of risk. Busan Industrial Co is currently generating about -0.03 per unit of volatility. If you would invest 8,666,052 in Busan Industrial Co on August 26, 2024 and sell it today you would lose (3,166,052) from holding Busan Industrial Co or give up 36.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
TK Chemical vs. Busan Industrial Co
Performance |
| Timeline |
| TK Chemical |
| Busan Industrial |
TK Chemical and Busan Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TK Chemical and Busan Industrial
The main advantage of trading using opposite TK Chemical and Busan Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TK Chemical 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.| TK Chemical vs. Busan Industrial Co | TK Chemical vs. Busan Ind | TK Chemical vs. Mirae Asset Daewoo | TK Chemical vs. UNISEM Co |
| Busan Industrial vs. Taeyang Metal Industrial | Busan Industrial vs. Lake Materials Co | Busan Industrial vs. Asiana Airlines | Busan Industrial vs. Ssangyong Materials Corp |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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