Correlation Between Busan Industrial and Simmtech Holdings

Can any of the company-specific risk be diversified away by investing in both Busan Industrial and Simmtech Holdings 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 Simmtech Holdings 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 Simmtech Holdings Co, you can compare the effects of market volatilities on Busan Industrial and Simmtech Holdings 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 Simmtech Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Busan Industrial and Simmtech Holdings.

Diversification Opportunities for Busan Industrial and Simmtech Holdings

-0.73

Correlation Coefficient

Busan Industrial  Simmtech Holdings

Pay attention - limited upside

The 3 months correlation between Busan and Simmtech is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Busan Industrial Co and Simmtech Holdings Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simmtech Holdings 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 Simmtech Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simmtech Holdings has no effect on the direction of Busan Industrial i.e., Busan Industrial and Simmtech Holdings go up and down completely randomly.

Pair Corralation between Busan Industrial and Simmtech Holdings

Assuming the 90 days trading horizon Busan Industrial Co is expected to under-perform the Simmtech Holdings. In addition to that, Busan Industrial is 1.95 times more volatile than Simmtech Holdings Co. It trades about -0.02 of its total potential returns per unit of risk. Simmtech Holdings Co is currently generating about 0.38 per unit of volatility. If you would invest  104,900  in Simmtech Holdings Co on October 12, 2024 and sell it today you would earn a total of  17,100  from holding Simmtech Holdings Co or generate 16.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Busan Industrial Co  vs.  Simmtech Holdings Co

Busan Industrial

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Busan Industrial Co are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Busan Industrial sustained solid returns over the last few months and may actually be approaching a breakup point.

Simmtech Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Simmtech Holdings Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Busan Industrial and Simmtech Holdings

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

The idea behind Busan Industrial Co and Simmtech Holdings Co 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.

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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.