Correlation Between Lotte Chilsung and BGF Retail
Can any of the company-specific risk be diversified away by investing in both Lotte Chilsung and BGF Retail 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 Lotte Chilsung and BGF Retail into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lotte Chilsung Beverage and BGF Retail Co, you can compare the effects of market volatilities on Lotte Chilsung and BGF Retail 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 Lotte Chilsung with a short position of BGF Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lotte Chilsung and BGF Retail.
Diversification Opportunities for Lotte Chilsung and BGF Retail
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lotte and BGF is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Lotte Chilsung Beverage and BGF Retail Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BGF Retail and Lotte Chilsung 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 Lotte Chilsung Beverage are associated (or correlated) with BGF Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BGF Retail has no effect on the direction of Lotte Chilsung i.e., Lotte Chilsung and BGF Retail go up and down completely randomly.
Pair Corralation between Lotte Chilsung and BGF Retail
Assuming the 90 days trading horizon Lotte Chilsung Beverage is expected to under-perform the BGF Retail. But the stock apears to be less risky and, when comparing its historical volatility, Lotte Chilsung Beverage is 1.14 times less risky than BGF Retail. The stock trades about -0.39 of its potential returns per unit of risk. The BGF Retail Co is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 10,460,000 in BGF Retail Co on November 7, 2024 and sell it today you would lose (100,000) from holding BGF Retail Co or give up 0.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lotte Chilsung Beverage vs. BGF Retail Co
Performance |
| Timeline |
| Lotte Chilsung Beverage |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| BGF Retail |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Lotte Chilsung and BGF Retail Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lotte Chilsung and BGF Retail
The main advantage of trading using opposite Lotte Chilsung and BGF Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lotte Chilsung position performs unexpectedly, BGF Retail 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 BGF Retail will offset losses from the drop in BGF Retail's long position.| Lotte Chilsung vs. FNSTech Co | Lotte Chilsung vs. PNC Technologies co | Lotte Chilsung vs. Mobile Appliance | Lotte Chilsung vs. Mobileleader CoLtd |
| BGF Retail vs. Automobile Pc | BGF Retail vs. MediaZen | BGF Retail vs. T3 Entertainment Co | BGF Retail vs. Polaris Office Corp |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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