Correlation Between Daejung Chemicals and BGF Retail
Can any of the company-specific risk be diversified away by investing in both Daejung Chemicals 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 Daejung Chemicals and BGF Retail into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daejung Chemicals Metals and BGF Retail Co, you can compare the effects of market volatilities on Daejung Chemicals 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 Daejung Chemicals with a short position of BGF Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daejung Chemicals and BGF Retail.
Diversification Opportunities for Daejung Chemicals and BGF Retail
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Daejung and BGF is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Daejung Chemicals Metals and BGF Retail Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BGF Retail and Daejung Chemicals 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 Daejung Chemicals Metals 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 Daejung Chemicals i.e., Daejung Chemicals and BGF Retail go up and down completely randomly.
Pair Corralation between Daejung Chemicals and BGF Retail
Assuming the 90 days trading horizon Daejung Chemicals is expected to generate 1.07 times less return on investment than BGF Retail. But when comparing it to its historical volatility, Daejung Chemicals Metals is 1.81 times less risky than BGF Retail. It trades about 0.17 of its potential returns per unit of risk. BGF Retail Co is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 10,360,000 in BGF Retail Co on November 27, 2024 and sell it today you would earn a total of 270,000 from holding BGF Retail Co or generate 2.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daejung Chemicals Metals vs. BGF Retail Co
Performance |
| Timeline |
| Daejung Chemicals Metals |
| BGF Retail |
Daejung Chemicals and BGF Retail Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daejung Chemicals and BGF Retail
The main advantage of trading using opposite Daejung Chemicals and BGF Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daejung Chemicals 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.| Daejung Chemicals vs. Eagon Industrial Co | Daejung Chemicals vs. Korea Alcohol Industrial | Daejung Chemicals vs. Seoyon Topmetal Co | Daejung Chemicals vs. Hyundai Industrial Co |
| BGF Retail vs. Cots Technology Co | BGF Retail vs. ADTechnology CoLtd | BGF Retail vs. SEOJEON ELECTRIC MACHINERY | BGF Retail vs. Kyeryong Construction Industrial |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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