Correlation Between Bohae Brewery and Jin Air
Can any of the company-specific risk be diversified away by investing in both Bohae Brewery and Jin Air 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 Jin Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bohae Brewery and Jin Air Co, you can compare the effects of market volatilities on Bohae Brewery and Jin Air 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 Jin Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bohae Brewery and Jin Air.
Diversification Opportunities for Bohae Brewery and Jin Air
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Bohae and Jin is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Bohae Brewery and Jin Air Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jin Air 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 Jin Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jin Air has no effect on the direction of Bohae Brewery i.e., Bohae Brewery and Jin Air go up and down completely randomly.
Pair Corralation between Bohae Brewery and Jin Air
Assuming the 90 days trading horizon Bohae Brewery is expected to generate 2.2 times more return on investment than Jin Air. However, Bohae Brewery is 2.2 times more volatile than Jin Air Co. It trades about 0.1 of its potential returns per unit of risk. Jin Air Co is currently generating about 0.03 per unit of risk. If you would invest 42,000 in Bohae Brewery on September 3, 2024 and sell it today you would earn a total of 4,600 from holding Bohae Brewery or generate 10.95% 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. Jin Air Co
Performance |
| Timeline |
| Bohae Brewery |
| Jin Air |
Bohae Brewery and Jin Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bohae Brewery and Jin Air
The main advantage of trading using opposite Bohae Brewery and Jin Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bohae Brewery position performs unexpectedly, Jin Air 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 Jin Air will offset losses from the drop in Jin Air'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 |
| Jin Air vs. DataSolution | Jin Air vs. Alton Sports CoLtd | Jin Air vs. SCI Information Service | Jin Air vs. Shinsegae Food |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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