Correlation Between Fine Besteel and Busan Industrial
Can any of the company-specific risk be diversified away by investing in both Fine Besteel 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 Fine Besteel and Busan Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fine Besteel Co and Busan Industrial Co, you can compare the effects of market volatilities on Fine Besteel 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 Fine Besteel with a short position of Busan Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fine Besteel and Busan Industrial.
Diversification Opportunities for Fine Besteel and Busan Industrial
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Fine and Busan is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Fine Besteel Co and Busan Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Busan Industrial and Fine Besteel 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 Fine Besteel Co 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 Fine Besteel i.e., Fine Besteel and Busan Industrial go up and down completely randomly.
Pair Corralation between Fine Besteel and Busan Industrial
Assuming the 90 days trading horizon Fine Besteel Co is expected to generate 1.68 times more return on investment than Busan Industrial. However, Fine Besteel is 1.68 times more volatile than Busan Industrial Co. It trades about 0.21 of its potential returns per unit of risk. Busan Industrial Co is currently generating about 0.15 per unit of risk. If you would invest 98,500 in Fine Besteel Co on October 25, 2024 and sell it today you would earn a total of 12,100 from holding Fine Besteel Co or generate 12.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fine Besteel Co vs. Busan Industrial Co
Performance |
| Timeline |
| Fine Besteel |
| Busan Industrial |
Fine Besteel and Busan Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fine Besteel and Busan Industrial
The main advantage of trading using opposite Fine Besteel and Busan Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fine Besteel 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.| Fine Besteel vs. KB Financial Group | Fine Besteel vs. Shinhan Financial Group | Fine Besteel vs. Hana Financial | Fine Besteel vs. Woori Financial Group |
| Busan Industrial vs. KB Financial Group | Busan Industrial vs. Shinhan Financial Group | Busan Industrial vs. Hana Financial | Busan Industrial vs. Woori Financial Group |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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