Correlation Between Namhae Chemical and BooKook Steel
Can any of the company-specific risk be diversified away by investing in both Namhae Chemical 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 Namhae Chemical and BooKook Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Namhae Chemical and BooKook Steel Co, you can compare the effects of market volatilities on Namhae Chemical 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 Namhae Chemical with a short position of BooKook Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Namhae Chemical and BooKook Steel.
Diversification Opportunities for Namhae Chemical and BooKook Steel
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Namhae and BooKook is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Namhae Chemical and BooKook Steel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BooKook Steel and Namhae Chemical 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 Namhae Chemical 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 Namhae Chemical i.e., Namhae Chemical and BooKook Steel go up and down completely randomly.
Pair Corralation between Namhae Chemical and BooKook Steel
Assuming the 90 days trading horizon Namhae Chemical is expected to under-perform the BooKook Steel. But the stock apears to be less risky and, when comparing its historical volatility, Namhae Chemical is 2.16 times less risky than BooKook Steel. The stock trades about -0.05 of its potential returns per unit of risk. The BooKook Steel Co is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 341,608 in BooKook Steel Co on November 2, 2024 and sell it today you would lose (89,108) from holding BooKook Steel Co or give up 26.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Namhae Chemical vs. BooKook Steel Co
Performance |
| Timeline |
| Namhae Chemical |
| BooKook Steel |
Namhae Chemical and BooKook Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Namhae Chemical and BooKook Steel
The main advantage of trading using opposite Namhae Chemical and BooKook Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Namhae Chemical 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.| Namhae Chemical vs. Daiyang Metal Co | Namhae Chemical vs. Eagon Industrial Co | Namhae Chemical vs. KT Submarine Telecom | Namhae Chemical vs. Korea Information Communications |
| BooKook Steel vs. KT Submarine Telecom | BooKook Steel vs. Kisan Telecom Co | BooKook Steel vs. Korea Information Communications | BooKook Steel vs. Hanmi Semiconductor Co |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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