Correlation Between Bohae Brewery and Seah Steel
Can any of the company-specific risk be diversified away by investing in both Bohae Brewery and Seah Steel 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 Bohae Brewery and Seah Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bohae Brewery and Seah Steel Corp, you can compare the effects of market volatilities on Bohae Brewery and Seah Steel 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 Bohae Brewery with a short position of Seah Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bohae Brewery and Seah Steel.
Diversification Opportunities for Bohae Brewery and Seah Steel
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Bohae and Seah is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Bohae Brewery and Seah Steel Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seah Steel Corp and Bohae Brewery 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 Bohae Brewery are associated (or correlated) with Seah Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seah Steel Corp has no effect on the direction of Bohae Brewery i.e., Bohae Brewery and Seah Steel go up and down completely randomly.
Pair Corralation between Bohae Brewery and Seah Steel
Assuming the 90 days trading horizon Bohae Brewery is expected to generate 1.97 times more return on investment than Seah Steel. However, Bohae Brewery is 1.97 times more volatile than Seah Steel Corp. It trades about 0.13 of its potential returns per unit of risk. Seah Steel Corp is currently generating about -0.04 per unit of risk. If you would invest 41,600 in Bohae Brewery on September 12, 2024 and sell it today you would earn a total of 7,500 from holding Bohae Brewery or generate 18.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bohae Brewery vs. Seah Steel Corp
Performance |
| Timeline |
| Bohae Brewery |
| Seah Steel Corp |
Bohae Brewery and Seah Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bohae Brewery and Seah Steel
The main advantage of trading using opposite Bohae Brewery and Seah Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bohae Brewery position performs unexpectedly, Seah Steel 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 Seah Steel will offset losses from the drop in Seah Steel's long position.| Bohae Brewery vs. Korea New Network | Bohae Brewery vs. ICD Co | Bohae Brewery vs. DYPNF CoLtd | Bohae Brewery vs. Solution Advanced Technology |
| Seah Steel vs. LG Chemicals | Seah Steel vs. POSCO Holdings | Seah Steel vs. Hanwha Solutions | Seah Steel vs. Lotte Chemical Corp |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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