Correlation Between Husteel and BooKook Steel
Can any of the company-specific risk be diversified away by investing in both Husteel and BooKook Steel 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 Husteel and BooKook Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Husteel and BooKook Steel Co, you can compare the effects of market volatilities on Husteel and BooKook Steel 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 Husteel with a short position of BooKook Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Husteel and BooKook Steel.
Diversification Opportunities for Husteel and BooKook Steel
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Husteel and BooKook is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Husteel and BooKook Steel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BooKook Steel and Husteel 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 Husteel are associated (or correlated) with BooKook Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BooKook Steel has no effect on the direction of Husteel i.e., Husteel and BooKook Steel go up and down completely randomly.
Pair Corralation between Husteel and BooKook Steel
Assuming the 90 days trading horizon Husteel is expected to generate 0.74 times more return on investment than BooKook Steel. However, Husteel is 1.36 times less risky than BooKook Steel. It trades about -0.02 of its potential returns per unit of risk. BooKook Steel Co is currently generating about -0.02 per unit of risk. If you would invest 477,050 in Husteel on September 12, 2024 and sell it today you would lose (103,550) from holding Husteel or give up 21.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Husteel vs. BooKook Steel Co
Performance |
| Timeline |
| Husteel |
| BooKook Steel |
Husteel and BooKook Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Husteel and BooKook Steel
The main advantage of trading using opposite Husteel and BooKook Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Husteel position performs unexpectedly, BooKook Steel 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 BooKook Steel will offset losses from the drop in BooKook Steel's long position.| Husteel vs. LG Chemicals | Husteel vs. POSCO Holdings | Husteel vs. Hanwha Solutions | Husteel vs. Lotte Chemical Corp |
| BooKook Steel vs. Samsung Electronics Co | BooKook Steel vs. Samsung Electronics Co | BooKook Steel vs. SK Hynix | BooKook Steel vs. POSCO Holdings |
Check out your portfolio center.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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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