Correlation Between WONIK Materials and Busan Industrial
Can any of the company-specific risk be diversified away by investing in both WONIK Materials 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 WONIK Materials and Busan Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between WONIK Materials CoLtd and Busan Industrial Co, you can compare the effects of market volatilities on WONIK Materials 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 WONIK Materials with a short position of Busan Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of WONIK Materials and Busan Industrial.
Diversification Opportunities for WONIK Materials and Busan Industrial
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between WONIK and Busan is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding WONIK Materials CoLtd and Busan Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Busan Industrial and WONIK Materials 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 WONIK Materials CoLtd 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 WONIK Materials i.e., WONIK Materials and Busan Industrial go up and down completely randomly.
Pair Corralation between WONIK Materials and Busan Industrial
Assuming the 90 days trading horizon WONIK Materials CoLtd is expected to generate 0.95 times more return on investment than Busan Industrial. However, WONIK Materials CoLtd is 1.05 times less risky than Busan Industrial. It trades about -0.04 of its potential returns per unit of risk. Busan Industrial Co is currently generating about -0.19 per unit of risk. If you would invest 1,822,073 in WONIK Materials CoLtd on October 16, 2024 and sell it today you would lose (37,073) from holding WONIK Materials CoLtd or give up 2.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
WONIK Materials CoLtd vs. Busan Industrial Co
Performance |
| Timeline |
| WONIK Materials CoLtd |
| Busan Industrial |
WONIK Materials and Busan Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with WONIK Materials and Busan Industrial
The main advantage of trading using opposite WONIK Materials and Busan Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WONIK Materials 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.| WONIK Materials vs. LG Chemicals | WONIK Materials vs. POSCO Holdings | WONIK Materials vs. Hanwha Solutions | WONIK Materials vs. Lotte Chemical Corp |
| Busan Industrial vs. Ecoplastic | Busan Industrial vs. PI Advanced Materials | Busan Industrial vs. RF Materials Co | Busan Industrial vs. WONIK Materials 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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