Correlation Between Bohae Brewery and Jeju Beer
Can any of the company-specific risk be diversified away by investing in both Bohae Brewery and Jeju Beer 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 Beer 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 Beer Co, you can compare the effects of market volatilities on Bohae Brewery and Jeju Beer 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 Beer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bohae Brewery and Jeju Beer.
Diversification Opportunities for Bohae Brewery and Jeju Beer
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Bohae and Jeju is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Bohae Brewery and Jeju Beer Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jeju Beer 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 Beer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jeju Beer has no effect on the direction of Bohae Brewery i.e., Bohae Brewery and Jeju Beer go up and down completely randomly.
Pair Corralation between Bohae Brewery and Jeju Beer
Assuming the 90 days trading horizon Bohae Brewery is expected to generate 2.13 times more return on investment than Jeju Beer. However, Bohae Brewery is 2.13 times more volatile than Jeju Beer Co. It trades about 0.1 of its potential returns per unit of risk. Jeju Beer Co is currently generating about 0.13 per unit of risk. If you would invest 41,700 in Bohae Brewery on September 2, 2024 and sell it today you would earn a total of 4,900 from holding Bohae Brewery or generate 11.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bohae Brewery vs. Jeju Beer Co
Performance |
| Timeline |
| Bohae Brewery |
| Jeju Beer |
Bohae Brewery and Jeju Beer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bohae Brewery and Jeju Beer
The main advantage of trading using opposite Bohae Brewery and Jeju Beer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bohae Brewery position performs unexpectedly, Jeju Beer 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 Beer will offset losses from the drop in Jeju Beer's long position.| Bohae Brewery vs. Korea Real Estate | Bohae Brewery vs. Korea Ratings Co | Bohae Brewery vs. IQuest Co | Bohae Brewery vs. Wonbang Tech Co |
| Jeju Beer vs. AptaBio Therapeutics | Jeju Beer vs. Daewoo SBI SPAC | Jeju Beer vs. Dream Security co | Jeju Beer vs. Microfriend |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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