Correlation Between Bosung Power and Homecast CoLtd

Can any of the company-specific risk be diversified away by investing in both Bosung Power and Homecast 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 Homecast 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 Homecast CoLtd, you can compare the effects of market volatilities on Bosung Power and Homecast 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 Homecast CoLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bosung Power and Homecast CoLtd.

Diversification Opportunities for Bosung Power and Homecast CoLtd

0.56

Correlation Coefficient

Bosung Power  Homecast CoLtd

Very weak diversification

The 3 months correlation between Bosung and Homecast is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Bosung Power Technology and Homecast CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Homecast 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 Homecast CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Homecast CoLtd has no effect on the direction of Bosung Power i.e., Bosung Power and Homecast CoLtd go up and down completely randomly.

Pair Corralation between Bosung Power and Homecast CoLtd

Assuming the 90 days trading horizon Bosung Power Technology is expected to under-perform the Homecast CoLtd. But the stock apears to be less risky and, when comparing its historical volatility, Bosung Power Technology is 1.39 times less risky than Homecast CoLtd. The stock trades about -0.02 of its potential returns per unit of risk. The Homecast CoLtd is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  430,500  in Homecast CoLtd on October 10, 2024 and sell it today you would lose (207,500) from holding Homecast CoLtd or give up 48.2% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.79%
Values	Daily Returns

Bosung Power Technology  vs.  Homecast CoLtd

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.

Homecast CoLtd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Homecast CoLtd 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.

Pair Trading with Bosung Power and Homecast CoLtd

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

The idea behind Bosung Power Technology and Homecast CoLtd 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.