Correlation Between Kolon Plastics and BGF Retail
Can any of the company-specific risk be diversified away by investing in both Kolon Plastics 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 Kolon Plastics and BGF Retail into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kolon Plastics and BGF Retail Co, you can compare the effects of market volatilities on Kolon Plastics 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 Kolon Plastics with a short position of BGF Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kolon Plastics and BGF Retail.
Diversification Opportunities for Kolon Plastics and BGF Retail
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Kolon and BGF is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Kolon Plastics and BGF Retail Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BGF Retail and Kolon Plastics 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 Kolon Plastics 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 Kolon Plastics i.e., Kolon Plastics and BGF Retail go up and down completely randomly.
Pair Corralation between Kolon Plastics and BGF Retail
Assuming the 90 days trading horizon Kolon Plastics is expected to generate 1.02 times more return on investment than BGF Retail. However, Kolon Plastics is 1.02 times more volatile than BGF Retail Co. It trades about 0.1 of its potential returns per unit of risk. BGF Retail Co is currently generating about 0.07 per unit of risk. If you would invest 531,000 in Kolon Plastics on October 12, 2024 and sell it today you would earn a total of 15,000 from holding Kolon Plastics or generate 2.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kolon Plastics vs. BGF Retail Co
Performance |
| Timeline |
| Kolon Plastics |
| BGF Retail |
Kolon Plastics and BGF Retail Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kolon Plastics and BGF Retail
The main advantage of trading using opposite Kolon Plastics and BGF Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kolon Plastics 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.| Kolon Plastics vs. Leaders Technology Investment | Kolon Plastics vs. Korea Investment Holdings | Kolon Plastics vs. Coloray International Investment | Kolon Plastics vs. SBI Investment KOREA |
| BGF Retail vs. Dongbang Transport Logistics | BGF Retail vs. INNOX Advanced Materials | BGF Retail vs. Daejung Chemicals Metals | BGF Retail vs. Kolon Plastics |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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