Correlation Between Han Kook and BooKook Steel
Can any of the company-specific risk be diversified away by investing in both Han Kook 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 Han Kook and BooKook Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Han Kook Steel and BooKook Steel Co, you can compare the effects of market volatilities on Han Kook 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 Han Kook with a short position of BooKook Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Han Kook and BooKook Steel.
Diversification Opportunities for Han Kook and BooKook Steel
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Han and BooKook is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Han Kook Steel and BooKook Steel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BooKook Steel and Han Kook 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 Han Kook 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 Han Kook i.e., Han Kook and BooKook Steel go up and down completely randomly.
Pair Corralation between Han Kook and BooKook Steel
Assuming the 90 days trading horizon Han Kook Steel is expected to generate 2.9 times more return on investment than BooKook Steel. However, Han Kook is 2.9 times more volatile than BooKook Steel Co. It trades about 0.04 of its potential returns per unit of risk. BooKook Steel Co is currently generating about 0.05 per unit of risk. If you would invest 186,700 in Han Kook Steel on September 14, 2024 and sell it today you would earn a total of 3,300 from holding Han Kook Steel or generate 1.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Han Kook Steel vs. BooKook Steel Co
Performance |
| Timeline |
| Han Kook Steel |
| BooKook Steel |
Han Kook and BooKook Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Han Kook and BooKook Steel
The main advantage of trading using opposite Han Kook and BooKook Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Han Kook 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.| Han Kook vs. Dong Il Steel | Han Kook vs. Seah Steel Corp | Han Kook vs. Ni Steel | Han Kook vs. Korea Steel Co |
| 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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