Correlation Between Bohae Brewery and LG Chem
Can any of the company-specific risk be diversified away by investing in both Bohae Brewery and LG Chem 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 LG Chem into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bohae Brewery and LG Chem, you can compare the effects of market volatilities on Bohae Brewery and LG Chem 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 LG Chem. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bohae Brewery and LG Chem.
Diversification Opportunities for Bohae Brewery and LG Chem
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Bohae and 051915 is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Bohae Brewery and LG Chem in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LG Chem 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 LG Chem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LG Chem has no effect on the direction of Bohae Brewery i.e., Bohae Brewery and LG Chem go up and down completely randomly.
Pair Corralation between Bohae Brewery and LG Chem
Assuming the 90 days trading horizon Bohae Brewery is expected to generate 0.57 times more return on investment than LG Chem. However, Bohae Brewery is 1.75 times less risky than LG Chem. It trades about -0.19 of its potential returns per unit of risk. LG Chem is currently generating about -0.26 per unit of risk. If you would invest 48,000 in Bohae Brewery on November 29, 2024 and sell it today you would lose (2,200) from holding Bohae Brewery or give up 4.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bohae Brewery vs. LG Chem
Performance |
| Timeline |
| Bohae Brewery |
| LG Chem |
Bohae Brewery and LG Chem Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bohae Brewery and LG Chem
The main advantage of trading using opposite Bohae Brewery and LG Chem positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bohae Brewery position performs unexpectedly, LG Chem 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 LG Chem will offset losses from the drop in LG Chem's long position.| Bohae Brewery vs. Namhae Chemical | Bohae Brewery vs. Hanwha Chemical Corp | Bohae Brewery vs. GS Retail Co | Bohae Brewery vs. SK Telecom Co |
| LG Chem vs. Clean Science co | LG Chem vs. iNtRON Biotechnology | LG Chem vs. Hannong Chemicals | LG Chem vs. INFINITT Healthcare Co |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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