Correlation Between BGF Retail and Choil Aluminum
Can any of the company-specific risk be diversified away by investing in both BGF Retail and Choil Aluminum 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 Choil Aluminum 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 Choil Aluminum, you can compare the effects of market volatilities on BGF Retail and Choil Aluminum 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 Choil Aluminum. Check out your portfolio center. Please also check ongoing floating volatility patterns of BGF Retail and Choil Aluminum.
Diversification Opportunities for BGF Retail and Choil Aluminum
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between BGF and Choil is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding BGF Retail Co and Choil Aluminum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Choil Aluminum 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 Choil Aluminum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Choil Aluminum has no effect on the direction of BGF Retail i.e., BGF Retail and Choil Aluminum go up and down completely randomly.
Pair Corralation between BGF Retail and Choil Aluminum
Assuming the 90 days trading horizon BGF Retail Co is expected to generate 0.94 times more return on investment than Choil Aluminum. However, BGF Retail Co is 1.07 times less risky than Choil Aluminum. It trades about -0.08 of its potential returns per unit of risk. Choil Aluminum is currently generating about -0.17 per unit of risk. 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 | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BGF Retail Co vs. Choil Aluminum
Performance |
| Timeline |
| BGF Retail |
| Choil Aluminum |
BGF Retail and Choil Aluminum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BGF Retail and Choil Aluminum
The main advantage of trading using opposite BGF Retail and Choil Aluminum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BGF Retail position performs unexpectedly, Choil Aluminum 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 Choil Aluminum will offset losses from the drop in Choil Aluminum's long position.| BGF Retail vs. Korea Real Estate | BGF Retail vs. Korea Ratings Co | BGF Retail vs. IQuest Co | BGF Retail vs. Wonbang Tech Co |
| Choil Aluminum vs. Busan Industrial Co | Choil Aluminum vs. Busan Ind | Choil Aluminum vs. Mirae Asset Daewoo | Choil Aluminum vs. Finebesteel |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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