Correlation Between Solution Advanced and Bosung Power
Can any of the company-specific risk be diversified away by investing in both Solution Advanced and Bosung Power 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 Solution Advanced and Bosung Power into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Solution Advanced Technology and Bosung Power Technology, you can compare the effects of market volatilities on Solution Advanced and Bosung Power 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 Solution Advanced with a short position of Bosung Power. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solution Advanced and Bosung Power.
Diversification Opportunities for Solution Advanced and Bosung Power
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Solution and Bosung is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Solution Advanced Technology and Bosung Power Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bosung Power Technology and Solution Advanced 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 Solution Advanced Technology are associated (or correlated) with Bosung Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bosung Power Technology has no effect on the direction of Solution Advanced i.e., Solution Advanced and Bosung Power go up and down completely randomly.
Pair Corralation between Solution Advanced and Bosung Power
Assuming the 90 days trading horizon Solution Advanced Technology is expected to generate 1.21 times more return on investment than Bosung Power. However, Solution Advanced is 1.21 times more volatile than Bosung Power Technology. It trades about 0.0 of its potential returns per unit of risk. Bosung Power Technology is currently generating about -0.22 per unit of risk. If you would invest 145,800 in Solution Advanced Technology on September 18, 2024 and sell it today you would lose (2,400) from holding Solution Advanced Technology or give up 1.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Solution Advanced Technology vs. Bosung Power Technology
Performance |
| Timeline |
| Solution Advanced |
| Bosung Power Technology |
Solution Advanced and Bosung Power Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solution Advanced and Bosung Power
The main advantage of trading using opposite Solution Advanced and Bosung Power positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solution Advanced position performs unexpectedly, Bosung Power 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 Bosung Power will offset losses from the drop in Bosung Power's long position.| Solution Advanced vs. Samsung Electronics Co | Solution Advanced vs. Samsung Electronics Co | Solution Advanced vs. LG Energy Solution | Solution Advanced vs. SK Hynix |
| Bosung Power vs. Korea New Network | Bosung Power vs. Solution Advanced Technology | Bosung Power vs. Busan Industrial Co | Bosung Power vs. Busan Ind |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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