Correlation Between Seoul Food and Bosung Power
Can any of the company-specific risk be diversified away by investing in both Seoul Food and Bosung Power 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 Seoul Food and Bosung Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Seoul Food Industrial and Bosung Power Technology, you can compare the effects of market volatilities on Seoul Food and Bosung Power 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 Seoul Food with a short position of Bosung Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seoul Food and Bosung Power.
Diversification Opportunities for Seoul Food and Bosung Power
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Seoul and Bosung is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Seoul Food Industrial and Bosung Power Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bosung Power Technology and Seoul Food 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 Seoul Food Industrial are associated (or correlated) with Bosung Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bosung Power Technology has no effect on the direction of Seoul Food i.e., Seoul Food and Bosung Power go up and down completely randomly.
Pair Corralation between Seoul Food and Bosung Power
Assuming the 90 days trading horizon Seoul Food Industrial is expected to under-perform the Bosung Power. But the stock apears to be less risky and, when comparing its historical volatility, Seoul Food Industrial is 3.75 times less risky than Bosung Power. The stock trades about -0.16 of its potential returns per unit of risk. The Bosung Power Technology is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 258,500 in Bosung Power Technology on November 3, 2024 and sell it today you would earn a total of 39,500 from holding Bosung Power Technology or generate 15.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Seoul Food Industrial vs. Bosung Power Technology
Performance |
| Timeline |
| Seoul Food Industrial |
| Bosung Power Technology |
Seoul Food and Bosung Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seoul Food and Bosung Power
The main advantage of trading using opposite Seoul Food and Bosung Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seoul Food position performs unexpectedly, Bosung Power 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 Bosung Power will offset losses from the drop in Bosung Power's long position.| Seoul Food vs. Handok Clean Tech | Seoul Food vs. Samji Electronics Co | Seoul Food vs. INFINITT Healthcare Co | Seoul Food vs. LG Household Healthcare |
| Bosung Power vs. Hironic Co | Bosung Power vs. SS TECH | Bosung Power vs. Yura Tech Co | Bosung Power vs. Hankook Steel 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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