Correlation Between Bohae Brewery and Nongshim
Can any of the company-specific risk be diversified away by investing in both Bohae Brewery and Nongshim 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 Nongshim into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bohae Brewery and Nongshim, you can compare the effects of market volatilities on Bohae Brewery and Nongshim 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 Nongshim. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bohae Brewery and Nongshim.
Diversification Opportunities for Bohae Brewery and Nongshim
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Bohae and Nongshim is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Bohae Brewery and Nongshim in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nongshim 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 Nongshim. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nongshim has no effect on the direction of Bohae Brewery i.e., Bohae Brewery and Nongshim go up and down completely randomly.
Pair Corralation between Bohae Brewery and Nongshim
Assuming the 90 days trading horizon Bohae Brewery is expected to under-perform the Nongshim. In addition to that, Bohae Brewery is 1.15 times more volatile than Nongshim. It trades about -0.03 of its total potential returns per unit of risk. Nongshim is currently generating about -0.02 per unit of volatility. If you would invest 40,450,000 in Nongshim on September 4, 2024 and sell it today you would lose (6,600,000) from holding Nongshim or give up 16.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bohae Brewery vs. Nongshim
Performance |
| Timeline |
| Bohae Brewery |
| Nongshim |
Bohae Brewery and Nongshim Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bohae Brewery and Nongshim
The main advantage of trading using opposite Bohae Brewery and Nongshim positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bohae Brewery position performs unexpectedly, Nongshim 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 Nongshim will offset losses from the drop in Nongshim's long position.| Bohae Brewery vs. LG Display | Bohae Brewery vs. Hyundai Motor | Bohae Brewery vs. Hyundai Motor Co | Bohae Brewery vs. Hyundai Motor Co |
| Nongshim vs. Kakao Games Corp | Nongshim vs. LG Household Healthcare | Nongshim vs. Cloud Air CoLtd | Nongshim vs. Bohae Brewery |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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