Correlation Between Taewoong Logistics and Busan Industrial

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

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

Diversification Opportunities for Taewoong Logistics and Busan Industrial

-0.38

Correlation Coefficient

Taewoong Logistics  Busan Industrial

Very good diversification

The 3 months correlation between Taewoong and Busan is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Taewoong Logistics CoLtd and Busan Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Busan Industrial and Taewoong Logistics 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 Taewoong Logistics CoLtd 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 Taewoong Logistics i.e., Taewoong Logistics and Busan Industrial go up and down completely randomly.

Pair Corralation between Taewoong Logistics and Busan Industrial

Assuming the 90 days trading horizon Taewoong Logistics CoLtd is expected to under-perform the Busan Industrial. But the stock apears to be less risky and, when comparing its historical volatility, Taewoong Logistics CoLtd is 2.33 times less risky than Busan Industrial. The stock trades about -0.13 of its potential returns per unit of risk. The Busan Industrial Co is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  4,993,344  in Busan Industrial Co on September 30, 2024 and sell it today you would earn a total of  2,516,656  from holding Busan Industrial Co or generate 50.4% return on investment over 90 days.

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

Taewoong Logistics CoLtd  vs.  Busan Industrial Co

Taewoong Logistics CoLtd

Risk-Adjusted Performance

0 of 100

Very Weak

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

Busan Industrial

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Busan Industrial Co are ranked lower than 10 (%) 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.

Pair Trading with Taewoong Logistics and Busan Industrial

The main advantage of trading using opposite Taewoong Logistics and Busan Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Taewoong Logistics 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 Taewoong Logistics CoLtd 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.