Correlation Between Air Busan and Fine Besteel
Can any of the company-specific risk be diversified away by investing in both Air Busan and Fine Besteel 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 Fine Besteel 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 Fine Besteel Co, you can compare the effects of market volatilities on Air Busan and Fine Besteel 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 Fine Besteel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Busan and Fine Besteel.
Diversification Opportunities for Air Busan and Fine Besteel
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Air and Fine is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Air Busan Co and Fine Besteel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fine Besteel 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 Fine Besteel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fine Besteel has no effect on the direction of Air Busan i.e., Air Busan and Fine Besteel go up and down completely randomly.
Pair Corralation between Air Busan and Fine Besteel
Assuming the 90 days trading horizon Air Busan is expected to generate 8.01 times less return on investment than Fine Besteel. But when comparing it to its historical volatility, Air Busan Co is 1.86 times less risky than Fine Besteel. It trades about 0.07 of its potential returns per unit of risk. Fine Besteel Co is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 94,700 in Fine Besteel Co on November 9, 2024 and sell it today you would earn a total of 17,300 from holding Fine Besteel Co or generate 18.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Busan Co vs. Fine Besteel Co
Performance |
| Timeline |
| Air Busan |
| Fine Besteel |
Air Busan and Fine Besteel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Busan and Fine Besteel
The main advantage of trading using opposite Air Busan and Fine Besteel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Busan position performs unexpectedly, Fine Besteel 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 Fine Besteel will offset losses from the drop in Fine Besteel'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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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