Correlation Between Jin Air and Busan Industrial
Can any of the company-specific risk be diversified away by investing in both Jin Air 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 Jin Air and Busan Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Jin Air Co and Busan Industrial Co, you can compare the effects of market volatilities on Jin Air 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 Jin Air with a short position of Busan Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jin Air and Busan Industrial.
Diversification Opportunities for Jin Air and Busan Industrial
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Jin and Busan is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Jin Air 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 Jin Air 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 Jin Air 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 Jin Air i.e., Jin Air and Busan Industrial go up and down completely randomly.
Pair Corralation between Jin Air and Busan Industrial
Assuming the 90 days trading horizon Jin Air Co is expected to generate 0.71 times more return on investment than Busan Industrial. However, Jin Air Co is 1.41 times less risky than Busan Industrial. It trades about 0.14 of its potential returns per unit of risk. Busan Industrial Co is currently generating about 0.09 per unit of risk. If you would invest 1,067,000 in Jin Air Co on August 29, 2024 and sell it today you would earn a total of 116,000 from holding Jin Air Co or generate 10.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jin Air Co vs. Busan Industrial Co
Performance |
| Timeline |
| Jin Air |
| Busan Industrial |
Jin Air and Busan Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jin Air and Busan Industrial
The main advantage of trading using opposite Jin Air and Busan Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jin Air 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.| Jin Air vs. Busan Industrial Co | Jin Air vs. Busan Ind | Jin Air vs. Mirae Asset Daewoo | Jin Air vs. UNISEM Co |
| Busan Industrial vs. Sangsin Energy Display | Busan Industrial vs. Inzi Display CoLtd | Busan Industrial vs. Top Material Co | Busan Industrial vs. Ssangyong Materials Corp |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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