Correlation Between Bookook Steel and Hankuk Steel
Can any of the company-specific risk be diversified away by investing in both Bookook Steel and Hankuk 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 Bookook Steel and Hankuk Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bookook Steel and Hankuk Steel Wire, you can compare the effects of market volatilities on Bookook Steel and Hankuk 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 Bookook Steel with a short position of Hankuk Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bookook Steel and Hankuk Steel.
Diversification Opportunities for Bookook Steel and Hankuk Steel
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Bookook and Hankuk is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Bookook Steel and Hankuk Steel Wire in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hankuk Steel Wire and Bookook Steel 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 Bookook Steel are associated (or correlated) with Hankuk Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hankuk Steel Wire has no effect on the direction of Bookook Steel i.e., Bookook Steel and Hankuk Steel go up and down completely randomly.
Pair Corralation between Bookook Steel and Hankuk Steel
Assuming the 90 days trading horizon Bookook Steel is expected to under-perform the Hankuk Steel. In addition to that, Bookook Steel is 1.02 times more volatile than Hankuk Steel Wire. It trades about -0.1 of its total potential returns per unit of risk. Hankuk Steel Wire is currently generating about 0.03 per unit of volatility. If you would invest 287,000 in Hankuk Steel Wire on September 1, 2024 and sell it today you would earn a total of 3,000 from holding Hankuk Steel Wire or generate 1.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bookook Steel vs. Hankuk Steel Wire
Performance |
| Timeline |
| Bookook Steel |
| Hankuk Steel Wire |
Bookook Steel and Hankuk Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bookook Steel and Hankuk Steel
The main advantage of trading using opposite Bookook Steel and Hankuk Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bookook Steel position performs unexpectedly, Hankuk 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 Hankuk Steel will offset losses from the drop in Hankuk Steel's long position.| Bookook Steel vs. Settlebank | Bookook Steel vs. DB Financial Investment | Bookook Steel vs. PJ Electronics Co | Bookook Steel vs. Korea Electronic Certification |
| Hankuk Steel vs. TS Investment Corp | Hankuk Steel vs. Atinum Investment Co | Hankuk Steel vs. Mobile Appliance | Hankuk Steel vs. Mobileleader CoLtd |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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