Correlation Between Wonil Special and Bookook Steel
Can any of the company-specific risk be diversified away by investing in both Wonil Special 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 Wonil Special and Bookook Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wonil Special Steel and Bookook Steel, you can compare the effects of market volatilities on Wonil Special 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 Wonil Special with a short position of Bookook Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wonil Special and Bookook Steel.
Diversification Opportunities for Wonil Special and Bookook Steel
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Wonil and Bookook is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Wonil Special Steel and Bookook Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bookook Steel and Wonil Special 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 Wonil Special Steel 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 Wonil Special i.e., Wonil Special and Bookook Steel go up and down completely randomly.
Pair Corralation between Wonil Special and Bookook Steel
Assuming the 90 days trading horizon Wonil Special Steel is expected to under-perform the Bookook Steel. But the stock apears to be less risky and, when comparing its historical volatility, Wonil Special Steel is 2.34 times less risky than Bookook Steel. The stock trades about -0.04 of its potential returns per unit of risk. The Bookook Steel is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 338,000 in Bookook Steel on September 3, 2024 and sell it today you would lose (100,000) from holding Bookook Steel or give up 29.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wonil Special Steel vs. Bookook Steel
Performance |
| Timeline |
| Wonil Special Steel |
| Bookook Steel |
Wonil Special and Bookook Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wonil Special and Bookook Steel
The main advantage of trading using opposite Wonil Special and Bookook Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wonil Special 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.| Wonil Special vs. Samwha Electronics Co | Wonil Special vs. KyungIn Electronics Co | Wonil Special vs. Daou Technology | Wonil Special vs. Cuckoo Electronics Co |
| Bookook Steel vs. Seah Steel Corp | Bookook Steel vs. Ni Steel | Bookook Steel vs. Korea Steel Co | Bookook Steel vs. Finebesteel |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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