Correlation Between Hanjoo Light and BGF Retail
Can any of the company-specific risk be diversified away by investing in both Hanjoo Light 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 Hanjoo Light and BGF Retail into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hanjoo Light Metal and BGF Retail Co, you can compare the effects of market volatilities on Hanjoo Light 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 Hanjoo Light with a short position of BGF Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanjoo Light and BGF Retail.
Diversification Opportunities for Hanjoo Light and BGF Retail
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hanjoo and BGF is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Hanjoo Light Metal and BGF Retail Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BGF Retail and Hanjoo Light 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 Hanjoo Light Metal 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 Hanjoo Light i.e., Hanjoo Light and BGF Retail go up and down completely randomly.
Pair Corralation between Hanjoo Light and BGF Retail
Assuming the 90 days trading horizon Hanjoo Light Metal is expected to under-perform the BGF Retail. But the stock apears to be less risky and, when comparing its historical volatility, Hanjoo Light Metal is 1.06 times less risky than BGF Retail. The stock trades about -0.34 of its potential returns per unit of risk. The BGF Retail Co is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest 11,410,000 in BGF Retail Co on August 31, 2024 and sell it today you would lose (510,000) from holding BGF Retail Co or give up 4.47% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hanjoo Light Metal vs. BGF Retail Co
Performance |
| Timeline |
| Hanjoo Light Metal |
| BGF Retail |
Hanjoo Light and BGF Retail Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanjoo Light and BGF Retail
The main advantage of trading using opposite Hanjoo Light and BGF Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanjoo Light 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.| Hanjoo Light vs. Value Added Technology | Hanjoo Light vs. Ilji Technology Co | Hanjoo Light vs. NewFlex Technology Co | Hanjoo Light vs. Eugene Technology CoLtd |
| BGF Retail vs. Korea Real Estate | BGF Retail vs. Korea Ratings Co | BGF Retail vs. IQuest Co | BGF Retail vs. Wonbang Tech 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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