Correlation Between Insung Information and BGF Retail
Can any of the company-specific risk be diversified away by investing in both Insung Information 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 Insung Information and BGF Retail into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Insung Information Co and BGF Retail Co, you can compare the effects of market volatilities on Insung Information 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 Insung Information with a short position of BGF Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Insung Information and BGF Retail.
Diversification Opportunities for Insung Information and BGF Retail
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Insung and BGF is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Insung Information 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 Insung Information 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 Insung Information 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 Insung Information i.e., Insung Information and BGF Retail go up and down completely randomly.
Pair Corralation between Insung Information and BGF Retail
Assuming the 90 days trading horizon Insung Information Co is expected to under-perform the BGF Retail. In addition to that, Insung Information is 1.87 times more volatile than BGF Retail Co. It trades about -0.16 of its total potential returns per unit of risk. BGF Retail Co is currently generating about -0.04 per unit of volatility. If you would invest 10,460,000 in BGF Retail Co on November 6, 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 | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Insung Information Co vs. BGF Retail Co
Performance |
| Timeline |
| Insung Information |
| BGF Retail |
Insung Information and BGF Retail Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Insung Information and BGF Retail
The main advantage of trading using opposite Insung Information and BGF Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Insung Information 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.| Insung Information vs. Heungkuk Metaltech CoLtd | Insung Information vs. KCC Engineering Construction | Insung Information vs. Hanshin Construction Co | Insung Information vs. Daiyang Metal Co |
| BGF Retail vs. Wonil Special Steel | BGF Retail vs. BooKook Steel Co | BGF Retail vs. Homecast CoLtd | BGF Retail vs. Samlip General Foods |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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