Correlation Between DAEDUCK ELECTRONICS and BGF Retail
Can any of the company-specific risk be diversified away by investing in both DAEDUCK ELECTRONICS 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 DAEDUCK ELECTRONICS and BGF Retail into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DAEDUCK ELECTRONICS CoLtd and BGF Retail Co, you can compare the effects of market volatilities on DAEDUCK ELECTRONICS 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 DAEDUCK ELECTRONICS with a short position of BGF Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of DAEDUCK ELECTRONICS and BGF Retail.
Diversification Opportunities for DAEDUCK ELECTRONICS and BGF Retail
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between DAEDUCK and BGF is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding DAEDUCK ELECTRONICS CoLtd and BGF Retail Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BGF Retail and DAEDUCK ELECTRONICS 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 DAEDUCK ELECTRONICS CoLtd 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 DAEDUCK ELECTRONICS i.e., DAEDUCK ELECTRONICS and BGF Retail go up and down completely randomly.
Pair Corralation between DAEDUCK ELECTRONICS and BGF Retail
Assuming the 90 days trading horizon DAEDUCK ELECTRONICS CoLtd is expected to generate 0.63 times more return on investment than BGF Retail. However, DAEDUCK ELECTRONICS CoLtd is 1.58 times less risky than BGF Retail. It trades about 0.05 of its potential returns per unit of risk. BGF Retail Co is currently generating about -0.06 per unit of risk. If you would invest 798,000 in DAEDUCK ELECTRONICS CoLtd on August 27, 2024 and sell it today you would earn a total of 11,000 from holding DAEDUCK ELECTRONICS CoLtd or generate 1.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DAEDUCK ELECTRONICS CoLtd vs. BGF Retail Co
Performance |
| Timeline |
| DAEDUCK ELECTRONICS CoLtd |
| BGF Retail |
DAEDUCK ELECTRONICS and BGF Retail Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DAEDUCK ELECTRONICS and BGF Retail
The main advantage of trading using opposite DAEDUCK ELECTRONICS and BGF Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DAEDUCK ELECTRONICS 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.| DAEDUCK ELECTRONICS vs. Cheryong Industrial CoLtd | DAEDUCK ELECTRONICS vs. Seoul Food Industrial | DAEDUCK ELECTRONICS vs. BGF Retail Co | DAEDUCK ELECTRONICS vs. KyungIn Electronics Co |
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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