Correlation Between Robotis CoLtd and BH

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

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

Diversification Opportunities for Robotis CoLtd and BH

0.32

Correlation Coefficient

Robotis CoLtd  BH

Weak diversification

The 3 months correlation between Robotis and BH is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Robotis CoLtd and BH Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BH Co and Robotis CoLtd 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 Robotis CoLtd are associated (or correlated) with BH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BH Co has no effect on the direction of Robotis CoLtd i.e., Robotis CoLtd and BH go up and down completely randomly.

Pair Corralation between Robotis CoLtd and BH

Assuming the 90 days trading horizon Robotis CoLtd is expected to generate 1.68 times more return on investment than BH. However, Robotis CoLtd is 1.68 times more volatile than BH Co. It trades about 0.23 of its potential returns per unit of risk. BH Co is currently generating about 0.0 per unit of risk. If you would invest  1,739,000  in Robotis CoLtd on September 3, 2024 and sell it today you would earn a total of  396,000  from holding Robotis CoLtd or generate 22.77% return on investment over 90 days.

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

Robotis CoLtd  vs.  BH Co

Robotis CoLtd

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Robotis CoLtd are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Robotis CoLtd sustained solid returns over the last few months and may actually be approaching a breakup point.

BH Co

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BH 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.

Pair Trading with Robotis CoLtd and BH

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

The idea behind Robotis CoLtd and BH 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.