Correlation Between DoubleU Games and Busan Ind

Can any of the company-specific risk be diversified away by investing in both DoubleU Games and Busan Ind 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 DoubleU Games and Busan Ind into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between DoubleU Games Co and Busan Ind, you can compare the effects of market volatilities on DoubleU Games and Busan Ind 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 DoubleU Games with a short position of Busan Ind. Check out your portfolio center. Please also check ongoing floating volatility patterns of DoubleU Games and Busan Ind.

Diversification Opportunities for DoubleU Games and Busan Ind

0.41

Correlation Coefficient

DoubleU Games  Busan Ind

Very weak diversification

The 3 months correlation between DoubleU and Busan is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding DoubleU Games Co and Busan Ind in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Busan Ind and DoubleU Games 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 DoubleU Games Co are associated (or correlated) with Busan Ind. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Busan Ind has no effect on the direction of DoubleU Games i.e., DoubleU Games and Busan Ind go up and down completely randomly.

Pair Corralation between DoubleU Games and Busan Ind

Assuming the 90 days trading horizon DoubleU Games Co is expected to generate 0.6 times more return on investment than Busan Ind. However, DoubleU Games Co is 1.68 times less risky than Busan Ind. It trades about -0.04 of its potential returns per unit of risk. Busan Ind is currently generating about -0.05 per unit of risk. If you would invest  5,298,097  in DoubleU Games Co on December 25, 2024 and sell it today you would lose (228,097) from holding DoubleU Games Co or give up 4.31% of portfolio value over 90 days.

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

DoubleU Games Co  vs.  Busan Ind

DoubleU Games

Risk-Adjusted Performance

Very Weak

Over the last 90 days DoubleU Games Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, DoubleU Games is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Busan Ind

Risk-Adjusted Performance

Very Weak

Over the last 90 days Busan Ind 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 DoubleU Games and Busan Ind

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

The idea behind DoubleU Games Co and Busan Ind 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.