Correlation Between Busan Industrial and Innowireless
Can any of the company-specific risk be diversified away by investing in both Busan Industrial and Innowireless 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 Innowireless 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 Innowireless Co, you can compare the effects of market volatilities on Busan Industrial and Innowireless 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 Innowireless. Check out your portfolio center. Please also check ongoing floating volatility patterns of Busan Industrial and Innowireless.
Diversification Opportunities for Busan Industrial and Innowireless
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Busan and Innowireless is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Busan Industrial Co and Innowireless Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innowireless 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 Innowireless. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innowireless has no effect on the direction of Busan Industrial i.e., Busan Industrial and Innowireless go up and down completely randomly.
Pair Corralation between Busan Industrial and Innowireless
Assuming the 90 days trading horizon Busan Industrial Co is expected to generate 1.6 times more return on investment than Innowireless. However, Busan Industrial is 1.6 times more volatile than Innowireless Co. It trades about 0.04 of its potential returns per unit of risk. Innowireless Co is currently generating about -0.04 per unit of risk. If you would invest 6,350,000 in Busan Industrial Co on September 24, 2024 and sell it today you would earn a total of 1,510,000 from holding Busan Industrial Co or generate 23.78% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 96.39% |
Values | Daily Returns |
Busan Industrial Co vs. Innowireless Co
Performance |
Timeline |
Busan Industrial |
Innowireless |
Busan Industrial and Innowireless Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Busan Industrial and Innowireless
The main advantage of trading using opposite Busan Industrial and Innowireless positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Busan Industrial position performs unexpectedly, Innowireless 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 Innowireless will offset losses from the drop in Innowireless' long position.Busan Industrial vs. AptaBio Therapeutics | Busan Industrial vs. Wonbang Tech Co | Busan Industrial vs. Busan Ind | Busan Industrial vs. Mirae Asset Daewoo |
Innowireless vs. AptaBio Therapeutics | Innowireless vs. Wonbang Tech Co | Innowireless vs. Busan Industrial Co | Innowireless vs. Busan Ind |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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