Correlation Between Shin Steel and Busan Ind
Can any of the company-specific risk be diversified away by investing in both Shin Steel 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 Shin Steel and Busan Ind into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shin Steel Co and Busan Ind, you can compare the effects of market volatilities on Shin Steel 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 Shin Steel with a short position of Busan Ind. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shin Steel and Busan Ind.
Diversification Opportunities for Shin Steel and Busan Ind
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Shin and Busan is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Shin Steel Co and Busan Ind in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Busan Ind and Shin Steel 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 Shin Steel 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 Shin Steel i.e., Shin Steel and Busan Ind go up and down completely randomly.
Pair Corralation between Shin Steel and Busan Ind
Assuming the 90 days trading horizon Shin Steel is expected to generate 8.8 times less return on investment than Busan Ind. But when comparing it to its historical volatility, Shin Steel Co is 1.0 times less risky than Busan Ind. It trades about 0.01 of its potential returns per unit of risk. Busan Ind is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 6,050,000 in Busan Ind on October 18, 2024 and sell it today you would earn a total of 1,840,000 from holding Busan Ind or generate 30.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.59% |
| Values | Daily Returns |
Shin Steel Co vs. Busan Ind
Performance |
| Timeline |
| Shin Steel |
| Busan Ind |
Shin Steel and Busan Ind Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shin Steel and Busan Ind
The main advantage of trading using opposite Shin Steel and Busan Ind positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shin Steel 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.| Shin Steel vs. Sam Yang Foods | Shin Steel vs. Shinil Industrial Co | Shin Steel vs. Drb Industrial | Shin Steel vs. Hankook Furniture Co |
| Busan Ind vs. Dong A Steel Technology | Busan Ind vs. Tuksu Engineering ConstructionLtd | Busan Ind vs. Shin Steel Co | Busan Ind vs. Moonbae Steel |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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