Correlation Between Shinhan Dollar and Busan Industrial
Can any of the company-specific risk be diversified away by investing in both Shinhan Dollar and Busan Industrial 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 Shinhan Dollar and Busan Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shinhan Dollar Index and Busan Industrial Co, you can compare the effects of market volatilities on Shinhan Dollar and Busan Industrial 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 Shinhan Dollar with a short position of Busan Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shinhan Dollar and Busan Industrial.
Diversification Opportunities for Shinhan Dollar and Busan Industrial
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Shinhan and Busan is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Shinhan Dollar Index and Busan Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Busan Industrial and Shinhan Dollar 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 Shinhan Dollar Index are associated (or correlated) with Busan Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Busan Industrial has no effect on the direction of Shinhan Dollar i.e., Shinhan Dollar and Busan Industrial go up and down completely randomly.
Pair Corralation between Shinhan Dollar and Busan Industrial
Assuming the 90 days trading horizon Shinhan Dollar is expected to generate 4.93 times less return on investment than Busan Industrial. But when comparing it to its historical volatility, Shinhan Dollar Index is 13.99 times less risky than Busan Industrial. It trades about 0.51 of its potential returns per unit of risk. Busan Industrial Co is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 5,010,000 in Busan Industrial Co on August 30, 2024 and sell it today you would earn a total of 2,370,000 from holding Busan Industrial Co or generate 47.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 65.85% |
| Values | Daily Returns |
Shinhan Dollar Index vs. Busan Industrial Co
Performance |
| Timeline |
| Shinhan Dollar Index |
| Busan Industrial |
Shinhan Dollar and Busan Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shinhan Dollar and Busan Industrial
The main advantage of trading using opposite Shinhan Dollar and Busan Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shinhan Dollar position performs unexpectedly, Busan Industrial 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 Industrial will offset losses from the drop in Busan Industrial's long position.| Shinhan Dollar vs. Shinhan Inverse Dollar | Shinhan Dollar vs. Shinhan BNP Paribas | Shinhan Dollar vs. Shinhan Copper Futures | Shinhan Dollar vs. Shinhan Gold Futures |
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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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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