Correlation Between Okins Electronics and BGF Retail
Can any of the company-specific risk be diversified away by investing in both Okins Electronics 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 Okins Electronics and BGF Retail into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okins Electronics Co and BGF Retail Co, you can compare the effects of market volatilities on Okins Electronics 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 Okins Electronics with a short position of BGF Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okins Electronics and BGF Retail.
Diversification Opportunities for Okins Electronics and BGF Retail
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Okins and BGF is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Okins Electronics 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 Okins Electronics 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 Okins Electronics 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 Okins Electronics i.e., Okins Electronics and BGF Retail go up and down completely randomly.
Pair Corralation between Okins Electronics and BGF Retail
Assuming the 90 days trading horizon Okins Electronics Co is expected to under-perform the BGF Retail. In addition to that, Okins Electronics is 2.71 times more volatile than BGF Retail Co. It trades about -0.03 of its total potential returns per unit of risk. BGF Retail Co is currently generating about -0.06 per unit of volatility. If you would invest 20,096,900 in BGF Retail Co on August 30, 2024 and sell it today you would lose (9,196,900) from holding BGF Retail Co or give up 45.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Okins Electronics Co vs. BGF Retail Co
Performance |
| Timeline |
| Okins Electronics |
| BGF Retail |
Okins Electronics and BGF Retail Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okins Electronics and BGF Retail
The main advantage of trading using opposite Okins Electronics and BGF Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okins Electronics 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.| Okins Electronics vs. Daou Data Corp | Okins Electronics vs. Busan Industrial Co | Okins Electronics vs. Busan Ind | Okins Electronics vs. Shinhan WTI Futures |
| BGF Retail vs. Samsung Electronics Co | BGF Retail vs. Samsung Electronics Co | BGF Retail vs. Hyundai Motor Co | BGF Retail vs. Hyundai Motor |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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