Correlation Between Bohae Brewery and Korean Reinsurance
Can any of the company-specific risk be diversified away by investing in both Bohae Brewery and Korean Reinsurance 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 Korean Reinsurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bohae Brewery and Korean Reinsurance Co, you can compare the effects of market volatilities on Bohae Brewery and Korean Reinsurance 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 Korean Reinsurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bohae Brewery and Korean Reinsurance.
Diversification Opportunities for Bohae Brewery and Korean Reinsurance
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Bohae and Korean is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Bohae Brewery and Korean Reinsurance Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korean Reinsurance 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 Korean Reinsurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korean Reinsurance has no effect on the direction of Bohae Brewery i.e., Bohae Brewery and Korean Reinsurance go up and down completely randomly.
Pair Corralation between Bohae Brewery and Korean Reinsurance
Assuming the 90 days trading horizon Bohae Brewery is expected to generate 6.74 times more return on investment than Korean Reinsurance. However, Bohae Brewery is 6.74 times more volatile than Korean Reinsurance Co. It trades about 0.07 of its potential returns per unit of risk. Korean Reinsurance Co is currently generating about 0.21 per unit of risk. If you would invest 42,700 in Bohae Brewery on August 29, 2024 and sell it today you would earn a total of 3,000 from holding Bohae Brewery or generate 7.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bohae Brewery vs. Korean Reinsurance Co
Performance |
| Timeline |
| Bohae Brewery |
| Korean Reinsurance |
Bohae Brewery and Korean Reinsurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bohae Brewery and Korean Reinsurance
The main advantage of trading using opposite Bohae Brewery and Korean Reinsurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bohae Brewery position performs unexpectedly, Korean Reinsurance 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 Korean Reinsurance will offset losses from the drop in Korean Reinsurance's long position.| Bohae Brewery vs. Samsung Electronics Co | Bohae Brewery vs. Samsung Electronics Co | Bohae Brewery vs. Hyundai Motor Co | Bohae Brewery vs. Hyundai Motor |
| Korean Reinsurance vs. Hanjin Transportation Co | Korean Reinsurance vs. Lotte Data Communication | Korean Reinsurance vs. Digital Power Communications | Korean Reinsurance vs. Taegu Broadcasting |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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