Correlation Between Air Busan and Busan Ind
Can any of the company-specific risk be diversified away by investing in both Air Busan 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 Air Busan and Busan Ind into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Air Busan Co and Busan Ind, you can compare the effects of market volatilities on Air Busan 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 Air Busan with a short position of Busan Ind. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Busan and Busan Ind.
Diversification Opportunities for Air Busan and Busan Ind
Very good diversification
The 3 months correlation between Air and Busan is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Air Busan Co and Busan Ind in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Busan Ind and Air Busan 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 Air Busan 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 Air Busan i.e., Air Busan and Busan Ind go up and down completely randomly.
Pair Corralation between Air Busan and Busan Ind
Assuming the 90 days trading horizon Air Busan Co is expected to generate 0.51 times more return on investment than Busan Ind. However, Air Busan Co is 1.97 times less risky than Busan Ind. It trades about 0.07 of its potential returns per unit of risk. Busan Ind is currently generating about -0.02 per unit of risk. If you would invest 229,500 in Air Busan Co on November 9, 2024 and sell it today you would earn a total of 4,500 from holding Air Busan Co or generate 1.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Busan Co vs. Busan Ind
Performance |
| Timeline |
| Air Busan |
| Busan Ind |
Air Busan and Busan Ind Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Busan and Busan Ind
The main advantage of trading using opposite Air Busan and Busan Ind positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Busan 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.| Air Busan vs. Top Material Co | Air Busan vs. Wonil Special Steel | Air Busan vs. Han Kook Steel | Air Busan vs. Hana Materials |
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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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