Correlation Between Heungkuk Metaltech and BGF Retail

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

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

Diversification Opportunities for Heungkuk Metaltech and BGF Retail

-0.42

Correlation Coefficient

Heungkuk Metaltech  BGF Retail

Very good diversification

The 3 months correlation between Heungkuk and BGF is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Heungkuk Metaltech CoLtd and BGF Retail Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BGF Retail and Heungkuk Metaltech 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 Heungkuk Metaltech CoLtd are associated (or correlated) with BGF Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BGF Retail has no effect on the direction of Heungkuk Metaltech i.e., Heungkuk Metaltech and BGF Retail go up and down completely randomly.

Pair Corralation between Heungkuk Metaltech and BGF Retail

Assuming the 90 days trading horizon Heungkuk Metaltech CoLtd is expected to generate 1.75 times more return on investment than BGF Retail. However, Heungkuk Metaltech is 1.75 times more volatile than BGF Retail Co. It trades about 0.21 of its potential returns per unit of risk. BGF Retail Co is currently generating about -0.07 per unit of risk. If you would invest  480,000  in Heungkuk Metaltech CoLtd on September 28, 2024 and sell it today you would earn a total of  70,000  from holding Heungkuk Metaltech CoLtd or generate 14.58% return on investment over 90 days.

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

Heungkuk Metaltech CoLtd  vs.  BGF Retail Co

Heungkuk Metaltech CoLtd

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Heungkuk Metaltech CoLtd are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Heungkuk Metaltech sustained solid returns over the last few months and may actually be approaching a breakup point.

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 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 Heungkuk Metaltech and BGF Retail

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

The idea behind Heungkuk Metaltech CoLtd and BGF Retail 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..