Correlation Between Homecast CoLtd and BGF Retail
Can any of the company-specific risk be diversified away by investing in both Homecast CoLtd 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 Homecast CoLtd and BGF Retail into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Homecast CoLtd and BGF Retail Co, you can compare the effects of market volatilities on Homecast CoLtd 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 Homecast CoLtd with a short position of BGF Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Homecast CoLtd and BGF Retail.
Diversification Opportunities for Homecast CoLtd and BGF Retail
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Homecast and BGF is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Homecast CoLtd and BGF Retail Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BGF Retail and Homecast CoLtd 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 Homecast CoLtd 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 Homecast CoLtd i.e., Homecast CoLtd and BGF Retail go up and down completely randomly.
Pair Corralation between Homecast CoLtd and BGF Retail
Assuming the 90 days trading horizon Homecast CoLtd is expected to generate 1.42 times more return on investment than BGF Retail. However, Homecast CoLtd is 1.42 times more volatile than BGF Retail Co. It trades about -0.09 of its potential returns per unit of risk. BGF Retail Co is currently generating about -0.15 per unit of risk. If you would invest 269,000 in Homecast CoLtd on September 3, 2024 and sell it today you would lose (17,500) from holding Homecast CoLtd or give up 6.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Homecast CoLtd vs. BGF Retail Co
Performance |
| Timeline |
| Homecast CoLtd |
| BGF Retail |
Homecast CoLtd and BGF Retail Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Homecast CoLtd and BGF Retail
The main advantage of trading using opposite Homecast CoLtd and BGF Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Homecast CoLtd 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.| Homecast CoLtd vs. Duksan Hi Metal | Homecast CoLtd vs. DONGKUK TED METAL | Homecast CoLtd vs. Jin Air Co | Homecast CoLtd vs. Seoyon Topmetal Co |
| BGF Retail vs. LG Display | BGF Retail vs. Hyundai Motor | BGF Retail vs. Hyundai Motor Co | BGF Retail vs. Hyundai Motor 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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