Correlation Between Bank of America and Bohae Brewery
Can any of the company-specific risk be diversified away by investing in both Bank of America and Bohae Brewery 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 Bank of America and Bohae Brewery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank of America and Bohae Brewery, you can compare the effects of market volatilities on Bank of America and Bohae Brewery 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 Bank of America with a short position of Bohae Brewery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and Bohae Brewery.
Diversification Opportunities for Bank of America and Bohae Brewery
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Bank and Bohae is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and Bohae Brewery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bohae Brewery and Bank of America 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 Bank of America are associated (or correlated) with Bohae Brewery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bohae Brewery has no effect on the direction of Bank of America i.e., Bank of America and Bohae Brewery go up and down completely randomly.
Pair Corralation between Bank of America and Bohae Brewery
Considering the 90-day investment horizon Bank of America is expected to generate 0.63 times more return on investment than Bohae Brewery. However, Bank of America is 1.59 times less risky than Bohae Brewery. It trades about 0.11 of its potential returns per unit of risk. Bohae Brewery is currently generating about -0.02 per unit of risk. If you would invest 2,806 in Bank of America on August 28, 2024 and sell it today you would earn a total of 1,944 from holding Bank of America or generate 69.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 96.33% |
| Values | Daily Returns |
Bank of America vs. Bohae Brewery
Performance |
| Timeline |
| Bank of America |
| Bohae Brewery |
Bank of America and Bohae Brewery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and Bohae Brewery
The main advantage of trading using opposite Bank of America and Bohae Brewery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, Bohae Brewery 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 Bohae Brewery will offset losses from the drop in Bohae Brewery's long position.| Bank of America vs. Nu Holdings | Bank of America vs. HSBC Holdings PLC | Bank of America vs. Bank of Nova |
| Bohae Brewery vs. Sam Yang Foods | Bohae Brewery vs. ZUM Internet Corp | Bohae Brewery vs. Inzi Display CoLtd | Bohae Brewery vs. CG Hi Tech |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
Other Complementary Tools
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Commodity Directory Find actively traded commodities issued by global exchanges |