Correlation Between BooKook Steel and Hyundai Engineering
Can any of the company-specific risk be diversified away by investing in both BooKook Steel and Hyundai Engineering 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 Hyundai Engineering into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BooKook Steel Co and Hyundai Engineering Construction, you can compare the effects of market volatilities on BooKook Steel and Hyundai Engineering 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 Hyundai Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of BooKook Steel and Hyundai Engineering.
Diversification Opportunities for BooKook Steel and Hyundai Engineering
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between BooKook and Hyundai is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding BooKook Steel Co and Hyundai Engineering Constructi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyundai Engineering 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 Co are associated (or correlated) with Hyundai Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyundai Engineering has no effect on the direction of BooKook Steel i.e., BooKook Steel and Hyundai Engineering go up and down completely randomly.
Pair Corralation between BooKook Steel and Hyundai Engineering
Assuming the 90 days trading horizon BooKook Steel Co is expected to under-perform the Hyundai Engineering. But the stock apears to be less risky and, when comparing its historical volatility, BooKook Steel Co is 1.08 times less risky than Hyundai Engineering. The stock trades about -0.07 of its potential returns per unit of risk. The Hyundai Engineering Construction is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 3,325,440 in Hyundai Engineering Construction on November 3, 2024 and sell it today you would lose (220,440) from holding Hyundai Engineering Construction or give up 6.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BooKook Steel Co vs. Hyundai Engineering Constructi
Performance |
| Timeline |
| BooKook Steel |
| Hyundai Engineering |
BooKook Steel and Hyundai Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BooKook Steel and Hyundai Engineering
The main advantage of trading using opposite BooKook Steel and Hyundai Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BooKook Steel position performs unexpectedly, Hyundai Engineering 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 Hyundai Engineering will offset losses from the drop in Hyundai Engineering's long position.| BooKook Steel vs. KT Submarine Telecom | BooKook Steel vs. Kisan Telecom Co | BooKook Steel vs. Korea Information Communications | BooKook Steel vs. Hanmi Semiconductor Co |
| Hyundai Engineering vs. Samsung Card Co | Hyundai Engineering vs. EBEST Investment Securities | Hyundai Engineering vs. Koh Young Technology | Hyundai Engineering vs. Hansol Chemica |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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