Correlation Between Koh Young and Bosung Power

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

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

Diversification Opportunities for Koh Young and Bosung Power

0.68

Correlation Coefficient

Koh Young  Bosung Power

Poor diversification

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

Pair Corralation between Koh Young and Bosung Power

Assuming the 90 days trading horizon Koh Young Technology is expected to generate 0.91 times more return on investment than Bosung Power. However, Koh Young Technology is 1.1 times less risky than Bosung Power. It trades about 0.11 of its potential returns per unit of risk. Bosung Power Technology is currently generating about 0.04 per unit of risk. If you would invest  846,000  in Koh Young Technology on October 22, 2024 and sell it today you would earn a total of  94,000  from holding Koh Young Technology or generate 11.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Koh Young Technology  vs.  Bosung Power Technology

Koh Young Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Koh Young Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Koh Young is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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 somewhat strong basic indicators, Bosung Power is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Koh Young and Bosung Power

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

The idea behind Koh Young Technology and Bosung Power Technology 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.