Correlation Between Korea New and Bohae Brewery
Can any of the company-specific risk be diversified away by investing in both Korea New and Bohae Brewery 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 New and Bohae Brewery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea New Network and Bohae Brewery, you can compare the effects of market volatilities on Korea New and Bohae Brewery 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 New with a short position of Bohae Brewery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea New and Bohae Brewery.
Diversification Opportunities for Korea New and Bohae Brewery
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Korea and Bohae is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Korea New Network and Bohae Brewery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bohae Brewery and Korea New 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 New Network are associated (or correlated) with Bohae Brewery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bohae Brewery has no effect on the direction of Korea New i.e., Korea New and Bohae Brewery go up and down completely randomly.
Pair Corralation between Korea New and Bohae Brewery
Assuming the 90 days trading horizon Korea New is expected to generate 2.11 times less return on investment than Bohae Brewery. But when comparing it to its historical volatility, Korea New Network is 2.53 times less risky than Bohae Brewery. It trades about 0.15 of its potential returns per unit of risk. Bohae Brewery is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 41,600 in Bohae Brewery on September 12, 2024 and sell it today you would earn a total of 7,500 from holding Bohae Brewery or generate 18.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea New Network vs. Bohae Brewery
Performance |
| Timeline |
| Korea New Network |
| Bohae Brewery |
Korea New and Bohae Brewery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea New and Bohae Brewery
The main advantage of trading using opposite Korea New and Bohae Brewery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea New position performs unexpectedly, Bohae Brewery 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 Bohae Brewery will offset losses from the drop in Bohae Brewery's long position.| Korea New vs. BGF Retail Co | Korea New vs. LG Display Co | Korea New vs. Grand Korea Leisure | Korea New vs. Lake Materials Co |
| Bohae Brewery vs. Korea New Network | Bohae Brewery vs. ICD Co | Bohae Brewery vs. DYPNF CoLtd | Bohae Brewery vs. Solution Advanced Technology |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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