Correlation Between Dongbang Ship and Busan Industrial
Can any of the company-specific risk be diversified away by investing in both Dongbang Ship and Busan Industrial 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 Dongbang Ship and Busan Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dongbang Ship Machinery and Busan Industrial Co, you can compare the effects of market volatilities on Dongbang Ship and Busan Industrial 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 Dongbang Ship with a short position of Busan Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongbang Ship and Busan Industrial.
Diversification Opportunities for Dongbang Ship and Busan Industrial
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dongbang and Busan is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Dongbang Ship Machinery and Busan Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Busan Industrial and Dongbang Ship 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 Dongbang Ship Machinery are associated (or correlated) with Busan Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Busan Industrial has no effect on the direction of Dongbang Ship i.e., Dongbang Ship and Busan Industrial go up and down completely randomly.
Pair Corralation between Dongbang Ship and Busan Industrial
Assuming the 90 days trading horizon Dongbang Ship is expected to generate 2.59 times less return on investment than Busan Industrial. But when comparing it to its historical volatility, Dongbang Ship Machinery is 2.12 times less risky than Busan Industrial. It trades about 0.06 of its potential returns per unit of risk. Busan Industrial Co is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 5,070,000 in Busan Industrial Co on September 4, 2024 and sell it today you would earn a total of 890,000 from holding Busan Industrial Co or generate 17.55% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Dongbang Ship Machinery vs. Busan Industrial Co
Performance |
Timeline |
Dongbang Ship Machinery |
Busan Industrial |
Dongbang Ship and Busan Industrial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Dongbang Ship and Busan Industrial
The main advantage of trading using opposite Dongbang Ship and Busan Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongbang Ship position performs unexpectedly, Busan Industrial 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 Busan Industrial will offset losses from the drop in Busan Industrial's long position.Dongbang Ship vs. LG Display | Dongbang Ship vs. Hyundai Motor | Dongbang Ship vs. Hyundai Motor Co | Dongbang Ship vs. Hyundai Motor Co |
Busan Industrial vs. AptaBio Therapeutics | Busan Industrial vs. Daewoo SBI SPAC | Busan Industrial vs. Dream Security co | Busan Industrial vs. Microfriend |
Check out your portfolio center.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 Stocks Directory module to find actively traded stocks across global markets.
Other Complementary Tools
Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
Commodity Directory Find actively traded commodities issued by global exchanges |