Correlation Between Bosung Power and KHVATEC CoLtd
Can any of the company-specific risk be diversified away by investing in both Bosung Power and KHVATEC CoLtd 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 KHVATEC CoLtd 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 KHVATEC CoLtd, you can compare the effects of market volatilities on Bosung Power and KHVATEC CoLtd 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 KHVATEC CoLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bosung Power and KHVATEC CoLtd.
Diversification Opportunities for Bosung Power and KHVATEC CoLtd
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Bosung and KHVATEC is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Bosung Power Technology and KHVATEC CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KHVATEC CoLtd 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 KHVATEC CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KHVATEC CoLtd has no effect on the direction of Bosung Power i.e., Bosung Power and KHVATEC CoLtd go up and down completely randomly.
Pair Corralation between Bosung Power and KHVATEC CoLtd
Assuming the 90 days trading horizon Bosung Power is expected to generate 2.45 times less return on investment than KHVATEC CoLtd. But when comparing it to its historical volatility, Bosung Power Technology is 1.5 times less risky than KHVATEC CoLtd. It trades about 0.05 of its potential returns per unit of risk. KHVATEC CoLtd is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 819,000 in KHVATEC CoLtd on December 25, 2024 and sell it today you would earn a total of 103,000 from holding KHVATEC CoLtd or generate 12.58% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Bosung Power Technology vs. KHVATEC CoLtd
Performance |
Timeline |
Bosung Power Technology |
KHVATEC CoLtd |
Bosung Power and KHVATEC CoLtd Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Bosung Power and KHVATEC CoLtd
The main advantage of trading using opposite Bosung Power and KHVATEC CoLtd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bosung Power position performs unexpectedly, KHVATEC CoLtd 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 KHVATEC CoLtd will offset losses from the drop in KHVATEC CoLtd's long position.Bosung Power vs. DONGKUK TED METAL | Bosung Power vs. Daehan Synthetic Fiber | Bosung Power vs. Hanjoo Light Metal | Bosung Power vs. Daejung Chemicals Metals |
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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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