Correlation Between Bookook Steel and Company K
Can any of the company-specific risk be diversified away by investing in both Bookook Steel and Company K 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 Company K into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bookook Steel and Company K Partners, you can compare the effects of market volatilities on Bookook Steel and Company K 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 Company K. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bookook Steel and Company K.
Diversification Opportunities for Bookook Steel and Company K
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bookook and Company is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Bookook Steel and Company K Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Company K Partners 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 Company K. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Company K Partners has no effect on the direction of Bookook Steel i.e., Bookook Steel and Company K go up and down completely randomly.
Pair Corralation between Bookook Steel and Company K
Assuming the 90 days trading horizon Bookook Steel is expected to generate 1.99 times more return on investment than Company K. However, Bookook Steel is 1.99 times more volatile than Company K Partners. It trades about 0.07 of its potential returns per unit of risk. Company K Partners is currently generating about -0.09 per unit of risk. If you would invest 241,500 in Bookook Steel on November 4, 2024 and sell it today you would earn a total of 5,500 from holding Bookook Steel or generate 2.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bookook Steel vs. Company K Partners
Performance |
| Timeline |
| Bookook Steel |
| Company K Partners |
Bookook Steel and Company K Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bookook Steel and Company K
The main advantage of trading using opposite Bookook Steel and Company K positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bookook Steel position performs unexpectedly, Company K 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 Company K will offset losses from the drop in Company K's long position.| Bookook Steel vs. Moonbae Steel | Bookook Steel vs. Korean Reinsurance Co | Bookook Steel vs. Sempio Foods Co | Bookook Steel vs. Lotte Non Life Insurance |
| Company K vs. Coloray International Investment | Company K vs. Taegu Broadcasting | Company K vs. Daelim Trading Co | Company K vs. TS Investment Corp |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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