Correlation Between LB Investment and Busan Ind
Can any of the company-specific risk be diversified away by investing in both LB Investment 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 LB Investment and Busan Ind into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LB Investment and Busan Ind, you can compare the effects of market volatilities on LB Investment 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 LB Investment with a short position of Busan Ind. Check out your portfolio center. Please also check ongoing floating volatility patterns of LB Investment and Busan Ind.
Diversification Opportunities for LB Investment and Busan Ind
-0.86 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between 309960 and Busan is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding LB Investment and Busan Ind in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Busan Ind and LB Investment 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 LB Investment 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 LB Investment i.e., LB Investment and Busan Ind go up and down completely randomly.
Pair Corralation between LB Investment and Busan Ind
Assuming the 90 days trading horizon LB Investment is expected to under-perform the Busan Ind. But the stock apears to be less risky and, when comparing its historical volatility, LB Investment is 2.33 times less risky than Busan Ind. The stock trades about -0.15 of its potential returns per unit of risk. The Busan Ind is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 5,690,000 in Busan Ind on November 7, 2024 and sell it today you would earn a total of 1,470,000 from holding Busan Ind or generate 25.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LB Investment vs. Busan Ind
Performance |
| Timeline |
| LB Investment |
| Busan Ind |
LB Investment and Busan Ind Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LB Investment and Busan Ind
The main advantage of trading using opposite LB Investment and Busan Ind positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LB Investment 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.| LB Investment vs. Samsung Electronics Co | LB Investment vs. Samsung Electronics Co | LB Investment vs. LG Energy Solution | LB Investment vs. SK Hynix |
| Busan Ind vs. Sempio Foods Co | Busan Ind vs. Sung Bo Chemicals | Busan Ind vs. Kukdo Chemical Co | Busan Ind vs. Lotte Fine Chemical |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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