Correlation Between BBC and Korea Computer
Can any of the company-specific risk be diversified away by investing in both BBC and Korea Computer 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 BBC and Korea Computer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BBC Co and Korea Computer, you can compare the effects of market volatilities on BBC and Korea Computer 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 BBC with a short position of Korea Computer. Check out your portfolio center. Please also check ongoing floating volatility patterns of BBC and Korea Computer.
Diversification Opportunities for BBC and Korea Computer
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between BBC and Korea is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding BBC Co and Korea Computer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Computer and BBC 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 BBC Co are associated (or correlated) with Korea Computer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Computer has no effect on the direction of BBC i.e., BBC and Korea Computer go up and down completely randomly.
Pair Corralation between BBC and Korea Computer
Assuming the 90 days trading horizon BBC Co is expected to under-perform the Korea Computer. But the stock apears to be less risky and, when comparing its historical volatility, BBC Co is 1.38 times less risky than Korea Computer. The stock trades about 0.0 of its potential returns per unit of risk. The Korea Computer is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 408,092 in Korea Computer on September 12, 2024 and sell it today you would earn a total of 68,908 from holding Korea Computer or generate 16.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
BBC Co vs. Korea Computer
Performance |
| Timeline |
| BBC Co |
| Korea Computer |
BBC and Korea Computer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BBC and Korea Computer
The main advantage of trading using opposite BBC and Korea Computer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BBC position performs unexpectedly, Korea Computer 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 Korea Computer will offset losses from the drop in Korea Computer's long position.| BBC vs. Barunson Entertainment Arts | BBC vs. Pan Entertainment Co | BBC vs. YG Entertainment | BBC vs. T3 Entertainment Co |
| Korea Computer vs. Cube Entertainment | Korea Computer vs. Dreamus Company | Korea Computer vs. LG Energy Solution | Korea Computer vs. Dongwon System |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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