Correlation Between Bookook Steel and Digital Imaging
Can any of the company-specific risk be diversified away by investing in both Bookook Steel and Digital Imaging 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 Digital Imaging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bookook Steel and Digital Imaging Technology, you can compare the effects of market volatilities on Bookook Steel and Digital Imaging 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 Digital Imaging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bookook Steel and Digital Imaging.
Diversification Opportunities for Bookook Steel and Digital Imaging
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bookook and Digital is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Bookook Steel and Digital Imaging Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digital Imaging Tech 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 Digital Imaging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digital Imaging Tech has no effect on the direction of Bookook Steel i.e., Bookook Steel and Digital Imaging go up and down completely randomly.
Pair Corralation between Bookook Steel and Digital Imaging
Assuming the 90 days trading horizon Bookook Steel is expected to under-perform the Digital Imaging. But the stock apears to be less risky and, when comparing its historical volatility, Bookook Steel is 1.81 times less risky than Digital Imaging. The stock trades about -0.01 of its potential returns per unit of risk. The Digital Imaging Technology is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,160,000 in Digital Imaging Technology on September 13, 2024 and sell it today you would earn a total of 15,000 from holding Digital Imaging Technology or generate 1.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bookook Steel vs. Digital Imaging Technology
Performance |
| Timeline |
| Bookook Steel |
| Digital Imaging Tech |
Bookook Steel and Digital Imaging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bookook Steel and Digital Imaging
The main advantage of trading using opposite Bookook Steel and Digital Imaging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bookook Steel position performs unexpectedly, Digital Imaging 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 Digital Imaging will offset losses from the drop in Digital Imaging's long position.| Bookook Steel vs. Dong Il Steel | Bookook Steel vs. Seah Steel Corp | Bookook Steel vs. Ni Steel | Bookook Steel vs. Korea Steel Co |
| Digital Imaging vs. SK Hynix | Digital Imaging vs. People Technology | Digital Imaging vs. Hana Materials | Digital Imaging vs. SIMMTECH 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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