Correlation Between Bohae Brewery and Jeju Semiconductor
Can any of the company-specific risk be diversified away by investing in both Bohae Brewery and Jeju Semiconductor 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 Jeju Semiconductor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bohae Brewery and Jeju Semiconductor Corp, you can compare the effects of market volatilities on Bohae Brewery and Jeju Semiconductor 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 Jeju Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bohae Brewery and Jeju Semiconductor.
Diversification Opportunities for Bohae Brewery and Jeju Semiconductor
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bohae and Jeju is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Bohae Brewery and Jeju Semiconductor Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jeju Semiconductor 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 Jeju Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jeju Semiconductor Corp has no effect on the direction of Bohae Brewery i.e., Bohae Brewery and Jeju Semiconductor go up and down completely randomly.
Pair Corralation between Bohae Brewery and Jeju Semiconductor
Assuming the 90 days trading horizon Bohae Brewery is expected to generate 1.0 times more return on investment than Jeju Semiconductor. However, Bohae Brewery is 1.0 times more volatile than Jeju Semiconductor Corp. It trades about 0.01 of its potential returns per unit of risk. Jeju Semiconductor Corp is currently generating about -0.21 per unit of risk. If you would invest 50,000 in Bohae Brewery on September 12, 2024 and sell it today you would lose (900.00) from holding Bohae Brewery or give up 1.8% 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. Jeju Semiconductor Corp
Performance |
| Timeline |
| Bohae Brewery |
| Jeju Semiconductor Corp |
Bohae Brewery and Jeju Semiconductor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bohae Brewery and Jeju Semiconductor
The main advantage of trading using opposite Bohae Brewery and Jeju Semiconductor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bohae Brewery position performs unexpectedly, Jeju Semiconductor 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 Jeju Semiconductor will offset losses from the drop in Jeju Semiconductor'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 |
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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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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