Correlation Between Korea Real and BGF Retail
Can any of the company-specific risk be diversified away by investing in both Korea Real 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 Real 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 Real Estate and BGF Retail Co, you can compare the effects of market volatilities on Korea Real 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 Real with a short position of BGF Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Real and BGF Retail.
Diversification Opportunities for Korea Real and BGF Retail
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Korea and BGF is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Korea Real Estate 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 Real 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 Real Estate 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 Real i.e., Korea Real and BGF Retail go up and down completely randomly.
Pair Corralation between Korea Real and BGF Retail
Assuming the 90 days trading horizon Korea Real Estate is expected to generate 0.54 times more return on investment than BGF Retail. However, Korea Real Estate is 1.85 times less risky than BGF Retail. It trades about -0.03 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 124,230 in Korea Real Estate on September 2, 2024 and sell it today you would lose (21,830) from holding Korea Real Estate or give up 17.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Real Estate vs. BGF Retail Co
Performance |
| Timeline |
| Korea Real Estate |
| BGF Retail |
Korea Real and BGF Retail Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Real and BGF Retail
The main advantage of trading using opposite Korea Real and BGF Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Real 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 Real vs. Samsung Electronics Co | Korea Real vs. Samsung Electronics Co | Korea Real vs. LG Energy Solution | Korea Real vs. SK Hynix |
| BGF Retail vs. Korea Real Estate | BGF Retail vs. Korea Ratings Co | BGF Retail vs. IQuest Co | BGF Retail vs. Wonbang Tech 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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