Correlation Between Busan Industrial and N Citron

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

Diversification Opportunities for Busan Industrial and N Citron

-0.23

Correlation Coefficient

Busan Industrial  N Citron

Very good diversification

The 3 months correlation between Busan and 101400 is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Busan Industrial Co and N Citron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on N Citron 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 N Citron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of N Citron has no effect on the direction of Busan Industrial i.e., Busan Industrial and N Citron go up and down completely randomly.

Pair Corralation between Busan Industrial and N Citron

Assuming the 90 days trading horizon Busan Industrial Co is expected to generate 3.63 times more return on investment than N Citron. However, Busan Industrial is 3.63 times more volatile than N Citron. It trades about 0.08 of its potential returns per unit of risk. N Citron is currently generating about -0.13 per unit of risk. If you would invest  7,195,997  in Busan Industrial Co on October 11, 2024 and sell it today you would earn a total of  404,003  from holding Busan Industrial Co or generate 5.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Busan Industrial Co  vs.  N Citron

Busan Industrial

Risk-Adjusted Performance

10 of 100

Good

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.

N Citron

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days N Citron 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.

Pair Trading with Busan Industrial and N Citron

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

The idea behind Busan Industrial Co and N Citron 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.