Correlation Between Solution Advanced and BGF Retail
Can any of the company-specific risk be diversified away by investing in both Solution Advanced and BGF Retail 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 BGF Retail 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 BGF Retail Co, you can compare the effects of market volatilities on Solution Advanced and BGF Retail 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 BGF Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solution Advanced and BGF Retail.
Diversification Opportunities for Solution Advanced and BGF Retail
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Solution and BGF is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Solution Advanced Technology and BGF Retail Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BGF Retail 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 BGF Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BGF Retail has no effect on the direction of Solution Advanced i.e., Solution Advanced and BGF Retail go up and down completely randomly.
Pair Corralation between Solution Advanced and BGF Retail
Assuming the 90 days trading horizon Solution Advanced Technology is expected to under-perform the BGF Retail. In addition to that, Solution Advanced is 1.65 times more volatile than BGF Retail Co. It trades about -0.07 of its total potential returns per unit of risk. BGF Retail Co is currently generating about -0.05 per unit of volatility. If you would invest 13,110,000 in BGF Retail Co on September 12, 2024 and sell it today you would lose (3,010,000) from holding BGF Retail Co or give up 22.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Solution Advanced Technology vs. BGF Retail Co
Performance |
| Timeline |
| Solution Advanced |
| BGF Retail |
Solution Advanced and BGF Retail Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solution Advanced and BGF Retail
The main advantage of trading using opposite Solution Advanced and BGF Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solution Advanced position performs unexpectedly, BGF Retail 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 BGF Retail will offset losses from the drop in BGF Retail'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 |
| BGF Retail vs. Korea New Network | BGF Retail vs. ICD Co | BGF Retail vs. DYPNF CoLtd | BGF Retail vs. Solution Advanced Technology |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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