Correlation Between Korean Drug and Bosung Power
Can any of the company-specific risk be diversified away by investing in both Korean Drug 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 Korean Drug and Bosung Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korean Drug Co and Bosung Power Technology, you can compare the effects of market volatilities on Korean Drug 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 Korean Drug with a short position of Bosung Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korean Drug and Bosung Power.
Diversification Opportunities for Korean Drug and Bosung Power
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Korean and Bosung is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Korean Drug Co 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 Korean Drug 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 Korean Drug Co 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 Korean Drug i.e., Korean Drug and Bosung Power go up and down completely randomly.
Pair Corralation between Korean Drug and Bosung Power
Assuming the 90 days trading horizon Korean Drug is expected to generate 4.5 times less return on investment than Bosung Power. But when comparing it to its historical volatility, Korean Drug Co is 1.4 times less risky than Bosung Power. It trades about 0.1 of its potential returns per unit of risk. 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 | Very Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
Korean Drug Co vs. Bosung Power Technology
Performance |
| Timeline |
| Korean Drug |
| Bosung Power Technology |
Korean Drug and Bosung Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korean Drug and Bosung Power
The main advantage of trading using opposite Korean Drug and Bosung Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korean Drug 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.| Korean Drug vs. Samsung Life Insurance | Korean Drug vs. Samlip General Foods | Korean Drug vs. Settlebank | Korean Drug vs. Hana Financial |
| 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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