Correlation Between KakaoBank Corp and BHI
Can any of the company-specific risk be diversified away by investing in both KakaoBank Corp and BHI 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 KakaoBank Corp and BHI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KakaoBank Corp and BHI Co, you can compare the effects of market volatilities on KakaoBank Corp and BHI 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 KakaoBank Corp with a short position of BHI. Check out your portfolio center. Please also check ongoing floating volatility patterns of KakaoBank Corp and BHI.
Diversification Opportunities for KakaoBank Corp and BHI
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between KakaoBank and BHI is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding KakaoBank Corp and BHI Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BHI Co and KakaoBank Corp 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 KakaoBank Corp are associated (or correlated) with BHI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BHI Co has no effect on the direction of KakaoBank Corp i.e., KakaoBank Corp and BHI go up and down completely randomly.
Pair Corralation between KakaoBank Corp and BHI
Assuming the 90 days trading horizon KakaoBank Corp is expected to under-perform the BHI. But the stock apears to be less risky and, when comparing its historical volatility, KakaoBank Corp is 2.19 times less risky than BHI. The stock trades about -0.36 of its potential returns per unit of risk. The BHI Co is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 1,440,000 in BHI Co on October 17, 2024 and sell it today you would earn a total of 301,000 from holding BHI Co or generate 20.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
KakaoBank Corp vs. BHI Co
Performance |
| Timeline |
| KakaoBank Corp |
| BHI Co |
KakaoBank Corp and BHI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KakaoBank Corp and BHI
The main advantage of trading using opposite KakaoBank Corp and BHI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KakaoBank Corp position performs unexpectedly, BHI 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 BHI will offset losses from the drop in BHI's long position.| KakaoBank Corp vs. DAEDUCK ELECTRONICS CoLtd | KakaoBank Corp vs. Kyeryong Construction Industrial | KakaoBank Corp vs. ABCO Electronics Co | KakaoBank Corp vs. ENERGYMACHINERY KOREA CoLtd |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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