Correlation Between Busan Industrial and Ananti

Can any of the company-specific risk be diversified away by investing in both Busan Industrial and Ananti 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 Industrial and Ananti into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Busan Industrial Co and Ananti Inc, you can compare the effects of market volatilities on Busan Industrial and Ananti 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 Industrial with a short position of Ananti. Check out your portfolio center. Please also check ongoing floating volatility patterns of Busan Industrial and Ananti.

Diversification Opportunities for Busan Industrial and Ananti

0.14

Correlation Coefficient

Busan Industrial  Ananti

Average diversification

The 3 months correlation between Busan and Ananti is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Busan Industrial Co and Ananti Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ananti Inc and Busan Industrial 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 Industrial Co are associated (or correlated) with Ananti. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ananti Inc has no effect on the direction of Busan Industrial i.e., Busan Industrial and Ananti go up and down completely randomly.

Pair Corralation between Busan Industrial and Ananti

Assuming the 90 days trading horizon Busan Industrial Co is expected to under-perform the Ananti. In addition to that, Busan Industrial is 1.09 times more volatile than Ananti Inc. It trades about -0.04 of its total potential returns per unit of risk. Ananti Inc is currently generating about 0.04 per unit of volatility. If you would invest  530,000  in Ananti Inc on December 29, 2024 and sell it today you would earn a total of  20,000  from holding Ananti Inc or generate 3.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.31%
Values	Daily Returns

Busan Industrial Co  vs.  Ananti Inc

Busan Industrial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Busan Industrial Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Ananti Inc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ananti Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Ananti is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Busan Industrial and Ananti

The main advantage of trading using opposite Busan Industrial and Ananti positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Busan Industrial position performs unexpectedly, Ananti 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 Ananti will offset losses from the drop in Ananti's long position.

The idea behind Busan Industrial Co and Ananti Inc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.