Correlation Between Bookook Steel and IL Science
Can any of the company-specific risk be diversified away by investing in both Bookook Steel and IL Science 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 IL Science into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bookook Steel and IL Science Co, you can compare the effects of market volatilities on Bookook Steel and IL Science 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 IL Science. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bookook Steel and IL Science.
Diversification Opportunities for Bookook Steel and IL Science
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Bookook and 307180 is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Bookook Steel and IL Science Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IL Science 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 IL Science. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IL Science has no effect on the direction of Bookook Steel i.e., Bookook Steel and IL Science go up and down completely randomly.
Pair Corralation between Bookook Steel and IL Science
Assuming the 90 days trading horizon Bookook Steel is expected to generate 0.64 times more return on investment than IL Science. However, Bookook Steel is 1.57 times less risky than IL Science. It trades about -0.16 of its potential returns per unit of risk. IL Science Co is currently generating about -0.22 per unit of risk. If you would invest 250,500 in Bookook Steel on September 12, 2024 and sell it today you would lose (22,500) from holding Bookook Steel or give up 8.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bookook Steel vs. IL Science Co
Performance |
| Timeline |
| Bookook Steel |
| IL Science |
Bookook Steel and IL Science Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bookook Steel and IL Science
The main advantage of trading using opposite Bookook Steel and IL Science positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bookook Steel position performs unexpectedly, IL Science 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 IL Science will offset losses from the drop in IL Science'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 |
| IL Science vs. Nable Communications | IL Science vs. BIT Computer Co | IL Science vs. Bookook Steel | IL Science vs. Digital Power Communications |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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