Correlation Between Kumho Petro and BGF Retail
Can any of the company-specific risk be diversified away by investing in both Kumho Petro 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 Kumho Petro and BGF Retail into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kumho Petro Chemical and BGF Retail Co, you can compare the effects of market volatilities on Kumho Petro 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 Kumho Petro with a short position of BGF Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kumho Petro and BGF Retail.
Diversification Opportunities for Kumho Petro and BGF Retail
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kumho and BGF is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Kumho Petro Chemical and BGF Retail Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BGF Retail and Kumho Petro 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 Kumho Petro Chemical 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 Kumho Petro i.e., Kumho Petro and BGF Retail go up and down completely randomly.
Pair Corralation between Kumho Petro and BGF Retail
Assuming the 90 days trading horizon Kumho Petro Chemical is expected to under-perform the BGF Retail. In addition to that, Kumho Petro is 1.08 times more volatile than BGF Retail Co. It trades about -0.3 of its total potential returns per unit of risk. BGF Retail Co is currently generating about -0.13 per unit of volatility. If you would invest 10,900,000 in BGF Retail Co on September 29, 2024 and sell it today you would lose (640,000) from holding BGF Retail Co or give up 5.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kumho Petro Chemical vs. BGF Retail Co
Performance |
| Timeline |
| Kumho Petro Chemical |
| BGF Retail |
Kumho Petro and BGF Retail Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kumho Petro and BGF Retail
The main advantage of trading using opposite Kumho Petro and BGF Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kumho Petro 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.| Kumho Petro vs. Kumho Petro Chemical | Kumho Petro vs. SKC Co | Kumho Petro vs. SK Chemicals Co | Kumho Petro vs. SK Chemicals Co |
| BGF Retail vs. Woori Financial Group | BGF Retail vs. Jb Financial | BGF Retail vs. Nh Investment And | BGF Retail vs. Kumho Petro Chemical |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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