Correlation Between KODEX Metaverse and Busan Industrial

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

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

Diversification Opportunities for KODEX Metaverse and Busan Industrial

0.41

Correlation Coefficient

KODEX Metaverse  Busan Industrial

Very weak diversification

The 3 months correlation between KODEX and Busan is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding KODEX Metaverse Nasdaq and Busan Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Busan Industrial and KODEX Metaverse 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 KODEX Metaverse Nasdaq 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 KODEX Metaverse i.e., KODEX Metaverse and Busan Industrial go up and down completely randomly.

Pair Corralation between KODEX Metaverse and Busan Industrial

Assuming the 90 days trading horizon KODEX Metaverse Nasdaq is expected to under-perform the Busan Industrial. But the etf apears to be less risky and, when comparing its historical volatility, KODEX Metaverse Nasdaq is 1.61 times less risky than Busan Industrial. The etf trades about -0.14 of its potential returns per unit of risk. The Busan Industrial Co is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  7,724,235  in Busan Industrial Co on December 22, 2024 and sell it today you would lose (754,235) from holding Busan Industrial Co or give up 9.76% of portfolio value over 90 days.

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

KODEX Metaverse Nasdaq  vs.  Busan Industrial Co

KODEX Metaverse Nasdaq

Risk-Adjusted Performance

Very Weak

Over the last 90 days KODEX Metaverse Nasdaq has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Etf's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the ETF investors.

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.

Pair Trading with KODEX Metaverse and Busan Industrial

The main advantage of trading using opposite KODEX Metaverse and Busan Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KODEX Metaverse 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.

The idea behind KODEX Metaverse Nasdaq and Busan Industrial Co 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 Global Correlations module to find global opportunities by holding instruments from different markets.