Correlation Between Sangsangin Investment and Bohae Brewery
Can any of the company-specific risk be diversified away by investing in both Sangsangin Investment and Bohae Brewery 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 Sangsangin Investment and Bohae Brewery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sangsangin Investment Securities and Bohae Brewery, you can compare the effects of market volatilities on Sangsangin Investment and Bohae Brewery 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 Sangsangin Investment with a short position of Bohae Brewery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sangsangin Investment and Bohae Brewery.
Diversification Opportunities for Sangsangin Investment and Bohae Brewery
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Sangsangin and Bohae is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Sangsangin Investment Securiti and Bohae Brewery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bohae Brewery and Sangsangin Investment 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 Sangsangin Investment Securities are associated (or correlated) with Bohae Brewery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bohae Brewery has no effect on the direction of Sangsangin Investment i.e., Sangsangin Investment and Bohae Brewery go up and down completely randomly.
Pair Corralation between Sangsangin Investment and Bohae Brewery
Assuming the 90 days trading horizon Sangsangin Investment Securities is expected to under-perform the Bohae Brewery. But the stock apears to be less risky and, when comparing its historical volatility, Sangsangin Investment Securities is 1.16 times less risky than Bohae Brewery. The stock trades about -0.08 of its potential returns per unit of risk. The Bohae Brewery is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 67,700 in Bohae Brewery on September 1, 2024 and sell it today you would lose (21,100) from holding Bohae Brewery or give up 31.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sangsangin Investment Securiti vs. Bohae Brewery
Performance |
| Timeline |
| Sangsangin Investment |
| Bohae Brewery |
Sangsangin Investment and Bohae Brewery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sangsangin Investment and Bohae Brewery
The main advantage of trading using opposite Sangsangin Investment and Bohae Brewery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sangsangin Investment position performs unexpectedly, Bohae Brewery 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 Bohae Brewery will offset losses from the drop in Bohae Brewery's long position.| Sangsangin Investment vs. Samsung Electronics Co | Sangsangin Investment vs. Samsung Electronics Co | Sangsangin Investment vs. KB Financial Group | Sangsangin Investment vs. Shinhan Financial Group |
| Bohae Brewery vs. Korea Real Estate | Bohae Brewery vs. Korea Ratings Co | Bohae Brewery vs. IQuest Co | Bohae Brewery vs. Wonbang Tech 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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