Correlation Between Design and Busan Industrial
Can any of the company-specific risk be diversified away by investing in both Design 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 Design and Busan Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Design Co and Busan Industrial Co, you can compare the effects of market volatilities on Design 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 Design with a short position of Busan Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Design and Busan Industrial.
Diversification Opportunities for Design and Busan Industrial
-0.57 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Design and Busan is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Design 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 Design 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 Design 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 Design i.e., Design and Busan Industrial go up and down completely randomly.
Pair Corralation between Design and Busan Industrial
Assuming the 90 days trading horizon Design Co is expected to under-perform the Busan Industrial. But the stock apears to be less risky and, when comparing its historical volatility, Design Co is 1.34 times less risky than Busan Industrial. The stock trades about -0.26 of its potential returns per unit of risk. The Busan Industrial Co is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 5,630,000 in Busan Industrial Co on September 24, 2024 and sell it today you would earn a total of 2,230,000 from holding Busan Industrial Co or generate 39.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Design Co vs. Busan Industrial Co
Performance |
| Timeline |
| Design |
| Busan Industrial |
Design and Busan Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Design and Busan Industrial
The main advantage of trading using opposite Design and Busan Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Design 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.The idea behind Design Co and Busan Industrial Co 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 Industrial vs. AptaBio Therapeutics | Busan Industrial vs. Wonbang Tech Co | Busan Industrial vs. Busan Ind | Busan Industrial vs. Mirae Asset Daewoo |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| CEOs Directory Screen CEOs from public companies around the world | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Transaction History View history of all your transactions and understand their impact on performance |