Correlation Between BHI and Cheryong Electric
Can any of the company-specific risk be diversified away by investing in both BHI and Cheryong Electric 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 BHI and Cheryong Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BHI Co and Cheryong Electric CoLtd, you can compare the effects of market volatilities on BHI and Cheryong Electric 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 BHI with a short position of Cheryong Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of BHI and Cheryong Electric.
Diversification Opportunities for BHI and Cheryong Electric
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between BHI and Cheryong is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding BHI Co and Cheryong Electric CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cheryong Electric CoLtd and BHI 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 BHI Co are associated (or correlated) with Cheryong Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cheryong Electric CoLtd has no effect on the direction of BHI i.e., BHI and Cheryong Electric go up and down completely randomly.
Pair Corralation between BHI and Cheryong Electric
Assuming the 90 days trading horizon BHI Co is expected to generate 1.29 times more return on investment than Cheryong Electric. However, BHI is 1.29 times more volatile than Cheryong Electric CoLtd. It trades about 0.23 of its potential returns per unit of risk. Cheryong Electric CoLtd is currently generating about 0.05 per unit of risk. If you would invest 804,000 in BHI Co on November 2, 2024 and sell it today you would earn a total of 1,546,000 from holding BHI Co or generate 192.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BHI Co vs. Cheryong Electric CoLtd
Performance |
| Timeline |
| BHI Co |
| Cheryong Electric CoLtd |
BHI and Cheryong Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BHI and Cheryong Electric
The main advantage of trading using opposite BHI and Cheryong Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BHI position performs unexpectedly, Cheryong Electric 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 Cheryong Electric will offset losses from the drop in Cheryong Electric's long position.| BHI vs. Samsung Electronics Co | BHI vs. Samsung Electronics Co | BHI vs. KB Financial Group | BHI vs. Shinhan Financial Group |
| Cheryong Electric vs. Dawonsys CoLtd | Cheryong Electric vs. Elentec Co | Cheryong Electric vs. Robostar CoLtd | Cheryong Electric vs. HyVision System |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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