Correlation Between BGF Retail and Nam Hwa
Can any of the company-specific risk be diversified away by investing in both BGF Retail and Nam Hwa 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 Nam Hwa 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 Nam Hwa Construction, you can compare the effects of market volatilities on BGF Retail and Nam Hwa 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 Nam Hwa. Check out your portfolio center. Please also check ongoing floating volatility patterns of BGF Retail and Nam Hwa.
Diversification Opportunities for BGF Retail and Nam Hwa
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BGF and Nam is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding BGF Retail Co and Nam Hwa Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nam Hwa Construction 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 Nam Hwa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nam Hwa Construction has no effect on the direction of BGF Retail i.e., BGF Retail and Nam Hwa go up and down completely randomly.
Pair Corralation between BGF Retail and Nam Hwa
Assuming the 90 days trading horizon BGF Retail Co is expected to generate 0.81 times more return on investment than Nam Hwa. However, BGF Retail Co is 1.23 times less risky than Nam Hwa. It trades about -0.05 of its potential returns per unit of risk. Nam Hwa Construction is currently generating about -0.06 per unit of risk. If you would invest 18,380,000 in BGF Retail Co on November 27, 2024 and sell it today you would lose (7,750,000) from holding BGF Retail Co or give up 42.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BGF Retail Co vs. Nam Hwa Construction
Performance |
| Timeline |
| BGF Retail |
| Nam Hwa Construction |
BGF Retail and Nam Hwa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BGF Retail and Nam Hwa
The main advantage of trading using opposite BGF Retail and Nam Hwa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BGF Retail position performs unexpectedly, Nam Hwa 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 Nam Hwa will offset losses from the drop in Nam Hwa's long position.| BGF Retail vs. Cots Technology Co | BGF Retail vs. ADTechnology CoLtd | BGF Retail vs. SEOJEON ELECTRIC MACHINERY | BGF Retail vs. Kyeryong Construction Industrial |
| Nam Hwa vs. Silicon2 Co | Nam Hwa vs. Coloray International Investment | Nam Hwa vs. NewFlex Technology Co | Nam Hwa vs. AeroSpace Technology of |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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