Correlation Between Busan Industrial and Sugentech

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

Diversification Opportunities for Busan Industrial and Sugentech

0.25

Correlation Coefficient

Busan Industrial  Sugentech

Modest diversification

The 3 months correlation between Busan and Sugentech is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Busan Industrial Co and Sugentech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sugentech 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 Sugentech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sugentech has no effect on the direction of Busan Industrial i.e., Busan Industrial and Sugentech go up and down completely randomly.

Pair Corralation between Busan Industrial and Sugentech

Assuming the 90 days trading horizon Busan Industrial Co is expected to under-perform the Sugentech. But the stock apears to be less risky and, when comparing its historical volatility, Busan Industrial Co is 2.4 times less risky than Sugentech. The stock trades about -0.07 of its potential returns per unit of risk. The Sugentech is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  503,000  in Sugentech on December 26, 2024 and sell it today you would earn a total of  51,000  from holding Sugentech or generate 10.14% return on investment over 90 days.

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

Busan Industrial Co  vs.  Sugentech

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.

Sugentech

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sugentech are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Sugentech sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Busan Industrial and Sugentech

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

The idea behind Busan Industrial Co and Sugentech 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.