Correlation Between Cheryong Industrial and Busan Ind
Can any of the company-specific risk be diversified away by investing in both Cheryong Industrial 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 Cheryong Industrial and Busan Ind into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cheryong Industrial CoLtd and Busan Ind, you can compare the effects of market volatilities on Cheryong Industrial 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 Cheryong Industrial with a short position of Busan Ind. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cheryong Industrial and Busan Ind.
Diversification Opportunities for Cheryong Industrial and Busan Ind
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cheryong and Busan is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Cheryong Industrial CoLtd and Busan Ind in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Busan Ind and Cheryong Industrial 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 Cheryong Industrial CoLtd 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 Cheryong Industrial i.e., Cheryong Industrial and Busan Ind go up and down completely randomly.
Pair Corralation between Cheryong Industrial and Busan Ind
Assuming the 90 days trading horizon Cheryong Industrial CoLtd is expected to under-perform the Busan Ind. But the stock apears to be less risky and, when comparing its historical volatility, Cheryong Industrial CoLtd is 1.57 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 0.08 of returns per unit of risk over similar time horizon. If you would invest 5,280,000 in Busan Ind on August 29, 2024 and sell it today you would earn a total of 400,000 from holding Busan Ind or generate 7.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cheryong Industrial CoLtd vs. Busan Ind
Performance |
| Timeline |
| Cheryong Industrial CoLtd |
| Busan Ind |
Cheryong Industrial and Busan Ind Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cheryong Industrial and Busan Ind
The main advantage of trading using opposite Cheryong Industrial and Busan Ind positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cheryong Industrial 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.| Cheryong Industrial vs. Lion Chemtech Co | Cheryong Industrial vs. Kuk Young GM | Cheryong Industrial vs. Nature and Environment | Cheryong Industrial vs. IL Science Co |
| Busan Ind vs. PJ Metal Co | Busan Ind vs. Lotte Chilsung Beverage | Busan Ind vs. Sempio Foods Co | Busan Ind vs. Korean Reinsurance Co |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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