Correlation Between BGF Retail and Dong A
Can any of the company-specific risk be diversified away by investing in both BGF Retail and Dong A 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 Dong A 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 Dong A Eltek, you can compare the effects of market volatilities on BGF Retail and Dong A 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 Dong A. Check out your portfolio center. Please also check ongoing floating volatility patterns of BGF Retail and Dong A.
Diversification Opportunities for BGF Retail and Dong A
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between BGF and Dong is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding BGF Retail Co and Dong A Eltek in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dong A Eltek 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 Dong A. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dong A Eltek has no effect on the direction of BGF Retail i.e., BGF Retail and Dong A go up and down completely randomly.
Pair Corralation between BGF Retail and Dong A
Assuming the 90 days trading horizon BGF Retail Co is expected to generate 0.53 times more return on investment than Dong A. However, BGF Retail Co is 1.88 times less risky than Dong A. It trades about 0.02 of its potential returns per unit of risk. Dong A Eltek is currently generating about -0.09 per unit of risk. If you would invest 10,190,000 in BGF Retail Co on September 14, 2024 and sell it today you would earn a total of 30,000 from holding BGF Retail Co or generate 0.29% 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. Dong A Eltek
Performance |
| Timeline |
| BGF Retail |
| Dong A Eltek |
BGF Retail and Dong A Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BGF Retail and Dong A
The main advantage of trading using opposite BGF Retail and Dong A positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BGF Retail position performs unexpectedly, Dong A 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 Dong A will offset losses from the drop in Dong A's long position.| BGF Retail vs. Korea New Network | BGF Retail vs. ICD Co | BGF Retail vs. DYPNF CoLtd | BGF Retail vs. Solution Advanced Technology |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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