Correlation Between BGF Retail and DataSolution
Can any of the company-specific risk be diversified away by investing in both BGF Retail and DataSolution 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 DataSolution 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 DataSolution, you can compare the effects of market volatilities on BGF Retail and DataSolution 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 DataSolution. Check out your portfolio center. Please also check ongoing floating volatility patterns of BGF Retail and DataSolution.
Diversification Opportunities for BGF Retail and DataSolution
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between BGF and DataSolution is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding BGF Retail Co and DataSolution in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DataSolution 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 DataSolution. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DataSolution has no effect on the direction of BGF Retail i.e., BGF Retail and DataSolution go up and down completely randomly.
Pair Corralation between BGF Retail and DataSolution
Assuming the 90 days trading horizon BGF Retail Co is expected to generate 0.53 times more return on investment than DataSolution. However, BGF Retail Co is 1.9 times less risky than DataSolution. It trades about -0.02 of its potential returns per unit of risk. DataSolution is currently generating about -0.03 per unit of risk. If you would invest 11,590,000 in BGF Retail Co on September 5, 2024 and sell it today you would lose (670,000) from holding BGF Retail Co or give up 5.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BGF Retail Co vs. DataSolution
Performance |
| Timeline |
| BGF Retail |
| DataSolution |
BGF Retail and DataSolution Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BGF Retail and DataSolution
The main advantage of trading using opposite BGF Retail and DataSolution positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BGF Retail position performs unexpectedly, DataSolution 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 DataSolution will offset losses from the drop in DataSolution's long position.| BGF Retail vs. LG Display | BGF Retail vs. Hyundai Motor | BGF Retail vs. Hyundai Motor Co | BGF Retail vs. Hyundai Motor Co |
| DataSolution vs. Samsung Electronics Co | DataSolution vs. Samsung Electronics Co | DataSolution vs. LG Energy Solution | DataSolution vs. SK Hynix |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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