Correlation Between Bosung Power and Insung Information

Can any of the company-specific risk be diversified away by investing in both Bosung Power and Insung Information 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 Bosung Power and Insung Information into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bosung Power Technology and Insung Information Co, you can compare the effects of market volatilities on Bosung Power and Insung Information 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 Bosung Power with a short position of Insung Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bosung Power and Insung Information.

Diversification Opportunities for Bosung Power and Insung Information

0.68

Correlation Coefficient

Bosung Power  Insung Information

Poor diversification

The 3 months correlation between Bosung and Insung is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Bosung Power Technology and Insung Information Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insung Information and Bosung Power 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 Bosung Power Technology are associated (or correlated) with Insung Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Insung Information has no effect on the direction of Bosung Power i.e., Bosung Power and Insung Information go up and down completely randomly.

Pair Corralation between Bosung Power and Insung Information

Assuming the 90 days trading horizon Bosung Power is expected to generate 1.3 times less return on investment than Insung Information. But when comparing it to its historical volatility, Bosung Power Technology is 1.35 times less risky than Insung Information. It trades about 0.34 of its potential returns per unit of risk. Insung Information Co is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest  161,000  in Insung Information Co on October 9, 2024 and sell it today you would earn a total of  30,800  from holding Insung Information Co or generate 19.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	94.74%
Values	Daily Returns

Bosung Power Technology  vs.  Insung Information Co

Bosung Power Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bosung Power Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Insung Information

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Insung Information Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Bosung Power and Insung Information

The main advantage of trading using opposite Bosung Power and Insung Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bosung Power position performs unexpectedly, Insung Information 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 Insung Information will offset losses from the drop in Insung Information's long position.

The idea behind Bosung Power Technology and Insung Information Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.