Correlation Between Busan Industrial and 487950

Can any of the company-specific risk be diversified away by investing in both Busan Industrial and 487950 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 487950 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 487950, you can compare the effects of market volatilities on Busan Industrial and 487950 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 487950. Check out your portfolio center. Please also check ongoing floating volatility patterns of Busan Industrial and 487950.

Diversification Opportunities for Busan Industrial and 487950

0.03

Correlation Coefficient

Busan Industrial  487950

Significant diversification

The 3 months correlation between Busan and 487950 is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Busan Industrial Co and 487950 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 487950 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 487950. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 487950 has no effect on the direction of Busan Industrial i.e., Busan Industrial and 487950 go up and down completely randomly.

Pair Corralation between Busan Industrial and 487950

Assuming the 90 days trading horizon Busan Industrial Co is expected to generate 7.9 times more return on investment than 487950. However, Busan Industrial is 7.9 times more volatile than 487950. It trades about 0.12 of its potential returns per unit of risk. 487950 is currently generating about 0.11 per unit of risk. If you would invest  5,990,020  in Busan Industrial Co on October 9, 2024 and sell it today you would earn a total of  1,659,980  from holding Busan Industrial Co or generate 27.71% return on investment over 90 days.

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

Busan Industrial Co  vs.  487950

Busan Industrial

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Busan Industrial Co are ranked lower than 11 (%) 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.

487950

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in 487950 are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, 487950 may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Busan Industrial and 487950

The main advantage of trading using opposite Busan Industrial and 487950 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Busan Industrial position performs unexpectedly, 487950 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 487950 will offset losses from the drop in 487950's long position.

The idea behind Busan Industrial Co and 487950 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.