Correlation Between BGF Retail and UNISEM

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

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

Diversification Opportunities for BGF Retail and UNISEM

0.54

Correlation Coefficient

BGF Retail  UNISEM

Very weak diversification

The 3 months correlation between BGF and UNISEM is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding BGF Retail Co and UNISEM Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNISEM and BGF Retail 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 BGF Retail Co are associated (or correlated) with UNISEM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNISEM has no effect on the direction of BGF Retail i.e., BGF Retail and UNISEM go up and down completely randomly.

Pair Corralation between BGF Retail and UNISEM

Assuming the 90 days trading horizon BGF Retail Co is expected to under-perform the UNISEM. But the stock apears to be less risky and, when comparing its historical volatility, BGF Retail Co is 1.69 times less risky than UNISEM. The stock trades about -0.12 of its potential returns per unit of risk. The UNISEM Co is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  640,000  in UNISEM Co on September 13, 2024 and sell it today you would lose (60,000) from holding UNISEM Co or give up 9.37% of portfolio value over 90 days.

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

BGF Retail Co  vs.  UNISEM Co

BGF Retail

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BGF Retail Co 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 January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

UNISEM

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UNISEM 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 BGF Retail and UNISEM

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

The idea behind BGF Retail Co and UNISEM 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.