Correlation Between SBI Investment and BHI
Can any of the company-specific risk be diversified away by investing in both SBI Investment and BHI 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 SBI Investment and BHI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SBI Investment KOREA and BHI Co, you can compare the effects of market volatilities on SBI Investment and BHI 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 SBI Investment with a short position of BHI. Check out your portfolio center. Please also check ongoing floating volatility patterns of SBI Investment and BHI.
Diversification Opportunities for SBI Investment and BHI
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SBI and BHI is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding SBI Investment KOREA and BHI Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BHI Co and SBI Investment 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 SBI Investment KOREA are associated (or correlated) with BHI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BHI Co has no effect on the direction of SBI Investment i.e., SBI Investment and BHI go up and down completely randomly.
Pair Corralation between SBI Investment and BHI
Assuming the 90 days trading horizon SBI Investment KOREA is expected to under-perform the BHI. But the stock apears to be less risky and, when comparing its historical volatility, SBI Investment KOREA is 2.02 times less risky than BHI. The stock trades about -0.04 of its potential returns per unit of risk. The BHI Co is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 1,525,000 in BHI Co on October 20, 2024 and sell it today you would earn a total of 283,000 from holding BHI Co or generate 18.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SBI Investment KOREA vs. BHI Co
Performance |
| Timeline |
| SBI Investment KOREA |
| BHI Co |
SBI Investment and BHI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SBI Investment and BHI
The main advantage of trading using opposite SBI Investment and BHI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SBI Investment position performs unexpectedly, BHI 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 BHI will offset losses from the drop in BHI's long position.| SBI Investment vs. Hanwha Life Insurance | SBI Investment vs. Tway Air Co | SBI Investment vs. Jin Air Co | SBI Investment vs. CKH Food Health |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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