Correlation Between Air Busan and BBC
Can any of the company-specific risk be diversified away by investing in both Air Busan and BBC 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 BBC 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 BBC Co, you can compare the effects of market volatilities on Air Busan and BBC 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 BBC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Air Busan and BBC.
Diversification Opportunities for Air Busan and BBC
Weak diversification
The 3 months correlation between Air and BBC is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Air Busan Co and BBC Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BBC Co 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 BBC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BBC Co has no effect on the direction of Air Busan i.e., Air Busan and BBC go up and down completely randomly.
Pair Corralation between Air Busan and BBC
Assuming the 90 days trading horizon Air Busan Co is expected to under-perform the BBC. In addition to that, Air Busan is 1.05 times more volatile than BBC Co. It trades about -0.04 of its total potential returns per unit of risk. BBC Co is currently generating about -0.01 per unit of volatility. If you would invest 938,152 in BBC Co on November 27, 2024 and sell it today you would lose (167,152) from holding BBC Co or give up 17.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Air Busan Co vs. BBC Co
Performance |
| Timeline |
| Air Busan |
| BBC Co |
Air Busan and BBC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Air Busan and BBC
The main advantage of trading using opposite Air Busan and BBC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Air Busan position performs unexpectedly, BBC 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 BBC will offset losses from the drop in BBC's long position.| Air Busan vs. Formetal Co | Air Busan vs. Industrial Bank | Air Busan vs. Sungmoon Electronics Co | Air Busan vs. Hyundai Industrial Co |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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