Correlation Between Korea Steel and BGF Retail
Can any of the company-specific risk be diversified away by investing in both Korea Steel 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 Korea Steel and BGF Retail into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea Steel Co and BGF Retail Co, you can compare the effects of market volatilities on Korea Steel 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 Korea Steel with a short position of BGF Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Steel and BGF Retail.
Diversification Opportunities for Korea Steel and BGF Retail
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Korea and BGF is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Korea Steel Co and BGF Retail Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BGF Retail and Korea Steel 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 Korea Steel Co 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 Korea Steel i.e., Korea Steel and BGF Retail go up and down completely randomly.
Pair Corralation between Korea Steel and BGF Retail
Assuming the 90 days trading horizon Korea Steel Co is expected to generate 1.45 times more return on investment than BGF Retail. However, Korea Steel is 1.45 times more volatile than BGF Retail Co. It trades about 0.17 of its potential returns per unit of risk. BGF Retail Co is currently generating about -0.06 per unit of risk. If you would invest 140,800 in Korea Steel Co on October 30, 2024 and sell it today you would earn a total of 23,700 from holding Korea Steel Co or generate 16.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Steel Co vs. BGF Retail Co
Performance |
| Timeline |
| Korea Steel |
| BGF Retail |
Korea Steel and BGF Retail Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Steel and BGF Retail
The main advantage of trading using opposite Korea Steel and BGF Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Steel 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.| Korea Steel vs. Seah Steel Corp | Korea Steel vs. Ajusteel Co | Korea Steel vs. Ni Steel | Korea Steel vs. Samwon Steel |
| BGF Retail vs. E Investment Development | BGF Retail vs. Lotte Chilsung Beverage | BGF Retail vs. Chorokbaem Healthcare Co | BGF Retail vs. Jeju Beer 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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