Correlation Between Humax and Busan Ind
Can any of the company-specific risk be diversified away by investing in both Humax 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 Humax and Busan Ind into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Humax Co and Busan Ind, you can compare the effects of market volatilities on Humax 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 Humax with a short position of Busan Ind. Check out your portfolio center. Please also check ongoing floating volatility patterns of Humax and Busan Ind.
Diversification Opportunities for Humax and Busan Ind
Pay attention - limited upside
The 3 months correlation between Humax and Busan is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Humax Co and Busan Ind in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Busan Ind and Humax 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 Humax Co 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 Humax i.e., Humax and Busan Ind go up and down completely randomly.
Pair Corralation between Humax and Busan Ind
Assuming the 90 days trading horizon Humax Co is expected to under-perform the Busan Ind. But the stock apears to be less risky and, when comparing its historical volatility, Humax Co is 1.41 times less risky than Busan Ind. The stock trades about -0.15 of its potential returns per unit of risk. The Busan Ind is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 6,424,282 in Busan Ind on September 12, 2024 and sell it today you would earn a total of 795,718 from holding Busan Ind or generate 12.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Humax Co vs. Busan Ind
Performance |
| Timeline |
| Humax |
| Busan Ind |
Humax and Busan Ind Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Humax and Busan Ind
The main advantage of trading using opposite Humax and Busan Ind positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Humax 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 Humax Co 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. Settlebank | Busan Ind vs. Jeju Bank | Busan Ind vs. Daejoo Electronic Materials | Busan Ind vs. InfoBank |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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