Correlation Between Busan Industrial and Samsung Asset

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

Diversification Opportunities for Busan Industrial and Samsung Asset

0.5

Correlation Coefficient

Busan Industrial  Samsung Asset

Very weak diversification

The 3 months correlation between Busan and Samsung is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Busan Industrial Co and Samsung Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung Asset Management 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 Samsung Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samsung Asset Management has no effect on the direction of Busan Industrial i.e., Busan Industrial and Samsung Asset go up and down completely randomly.

Pair Corralation between Busan Industrial and Samsung Asset

Assuming the 90 days trading horizon Busan Industrial Co is expected to generate 2.14 times more return on investment than Samsung Asset. However, Busan Industrial is 2.14 times more volatile than Samsung Asset Management. It trades about -0.06 of its potential returns per unit of risk. Samsung Asset Management is currently generating about -0.13 per unit of risk. If you would invest  7,694,335  in Busan Industrial Co on December 24, 2024 and sell it today you would lose (724,335) from holding Busan Industrial Co or give up 9.41% of portfolio value over 90 days.

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

Busan Industrial Co  vs.  Samsung Asset Management

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.

Samsung Asset Management

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Busan Industrial and Samsung Asset

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

The idea behind Busan Industrial Co and Samsung Asset Management 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.