Correlation Between Air Busan and Lion Chemtech
Can any of the company-specific risk be diversified away by investing in both Air Busan and Lion Chemtech 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 Lion Chemtech 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 Lion Chemtech Co, you can compare the effects of market volatilities on Air Busan and Lion Chemtech 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 Lion Chemtech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Busan and Lion Chemtech.
Diversification Opportunities for Air Busan and Lion Chemtech
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Air and Lion is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Air Busan Co and Lion Chemtech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lion Chemtech 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 Lion Chemtech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lion Chemtech has no effect on the direction of Air Busan i.e., Air Busan and Lion Chemtech go up and down completely randomly.
Pair Corralation between Air Busan and Lion Chemtech
Assuming the 90 days trading horizon Air Busan Co is expected to generate 1.01 times more return on investment than Lion Chemtech. However, Air Busan is 1.01 times more volatile than Lion Chemtech Co. It trades about 0.36 of its potential returns per unit of risk. Lion Chemtech Co is currently generating about -0.09 per unit of risk. If you would invest 223,000 in Air Busan Co on October 28, 2024 and sell it today you would earn a total of 24,500 from holding Air Busan Co or generate 10.99% 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. Lion Chemtech Co
Performance |
| Timeline |
| Air Busan |
| Lion Chemtech |
Air Busan and Lion Chemtech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Busan and Lion Chemtech
The main advantage of trading using opposite Air Busan and Lion Chemtech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Busan position performs unexpectedly, Lion Chemtech 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 Lion Chemtech will offset losses from the drop in Lion Chemtech's long position.| Air Busan vs. Jin Air Co | Air Busan vs. Tway Air Co | Air Busan vs. Busan Industrial Co | Air Busan vs. Busan Ind |
| Lion Chemtech vs. Nature and Environment | Lion Chemtech vs. Cheryong Industrial CoLtd | Lion Chemtech vs. Busan Industrial Co | Lion Chemtech vs. Busan Ind |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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