Correlation Between Busan Ind and Asiana Airlines
Can any of the company-specific risk be diversified away by investing in both Busan Ind and Asiana Airlines 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 Busan Ind and Asiana Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Busan Ind and Asiana Airlines, you can compare the effects of market volatilities on Busan Ind and Asiana Airlines 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 Busan Ind with a short position of Asiana Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Busan Ind and Asiana Airlines.
Diversification Opportunities for Busan Ind and Asiana Airlines
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Busan and Asiana is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Busan Ind and Asiana Airlines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asiana Airlines and Busan Ind 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 Busan Ind are associated (or correlated) with Asiana Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asiana Airlines has no effect on the direction of Busan Ind i.e., Busan Ind and Asiana Airlines go up and down completely randomly.
Pair Corralation between Busan Ind and Asiana Airlines
Assuming the 90 days trading horizon Busan Ind is expected to generate 3.34 times more return on investment than Asiana Airlines. However, Busan Ind is 3.34 times more volatile than Asiana Airlines. It trades about 0.21 of its potential returns per unit of risk. Asiana Airlines is currently generating about -0.09 per unit of risk. If you would invest 5,630,000 in Busan Ind on September 25, 2024 and sell it today you would earn a total of 2,120,000 from holding Busan Ind or generate 37.66% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Busan Ind vs. Asiana Airlines
Performance |
Timeline |
Busan Ind |
Asiana Airlines |
Busan Ind and Asiana Airlines Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Busan Ind and Asiana Airlines
The main advantage of trading using opposite Busan Ind and Asiana Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Busan Ind position performs unexpectedly, Asiana Airlines 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 Asiana Airlines will offset losses from the drop in Asiana Airlines' long position.Busan Ind vs. Samsung Electronics Co | Busan Ind vs. Samsung Electronics Co | Busan Ind vs. LG Energy Solution | Busan Ind vs. SK Hynix |
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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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