Correlation Between BGF Retail and OCI
Can any of the company-specific risk be diversified away by investing in both BGF Retail and OCI 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 BGF Retail and OCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BGF Retail Co and OCI Co, you can compare the effects of market volatilities on BGF Retail and OCI 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 BGF Retail with a short position of OCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of BGF Retail and OCI.
Diversification Opportunities for BGF Retail and OCI
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between BGF and OCI is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding BGF Retail Co and OCI Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OCI Co and BGF Retail 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 BGF Retail Co are associated (or correlated) with OCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OCI Co has no effect on the direction of BGF Retail i.e., BGF Retail and OCI go up and down completely randomly.
Pair Corralation between BGF Retail and OCI
Assuming the 90 days trading horizon BGF Retail Co is expected to under-perform the OCI. But the stock apears to be less risky and, when comparing its historical volatility, BGF Retail Co is 4.06 times less risky than OCI. The stock trades about -0.18 of its potential returns per unit of risk. The OCI Co is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest 6,030,000 in OCI Co on October 20, 2024 and sell it today you would earn a total of 2,370,000 from holding OCI Co or generate 39.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BGF Retail Co vs. OCI Co
Performance |
| Timeline |
| BGF Retail |
| OCI Co |
BGF Retail and OCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BGF Retail and OCI
The main advantage of trading using opposite BGF Retail and OCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BGF Retail position performs unexpectedly, OCI 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 OCI will offset losses from the drop in OCI's long position.| BGF Retail vs. Lake Materials Co | BGF Retail vs. Atinum Investment Co | BGF Retail vs. Daejoo Electronic Materials | BGF Retail vs. EV Advanced Material |
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 Stocks Directory module to find actively traded stocks across global markets.
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