Correlation Between BooKook Steel and Han Kook
Can any of the company-specific risk be diversified away by investing in both BooKook Steel and Han Kook 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 Han Kook 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 Han Kook Steel, you can compare the effects of market volatilities on BooKook Steel and Han Kook 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 Han Kook. Check out your portfolio center. Please also check ongoing floating volatility patterns of BooKook Steel and Han Kook.
Diversification Opportunities for BooKook Steel and Han Kook
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between BooKook and Han is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding BooKook Steel Co and Han Kook Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Han Kook Steel 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 Han Kook. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Han Kook Steel has no effect on the direction of BooKook Steel i.e., BooKook Steel and Han Kook go up and down completely randomly.
Pair Corralation between BooKook Steel and Han Kook
Assuming the 90 days trading horizon BooKook Steel Co is expected to under-perform the Han Kook. But the stock apears to be less risky and, when comparing its historical volatility, BooKook Steel Co is 1.22 times less risky than Han Kook. The stock trades about -0.05 of its potential returns per unit of risk. The Han Kook Steel is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 301,000 in Han Kook Steel on September 14, 2024 and sell it today you would lose (111,000) from holding Han Kook Steel or give up 36.88% 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. Han Kook Steel
Performance |
| Timeline |
| BooKook Steel |
| Han Kook Steel |
BooKook Steel and Han Kook Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BooKook Steel and Han Kook
The main advantage of trading using opposite BooKook Steel and Han Kook positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BooKook Steel position performs unexpectedly, Han Kook 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 Han Kook will offset losses from the drop in Han Kook's long position.| BooKook Steel vs. Samsung Electronics Co | BooKook Steel vs. Samsung Electronics Co | BooKook Steel vs. SK Hynix | BooKook Steel vs. POSCO Holdings |
| Han Kook vs. Dong Il Steel | Han Kook vs. Seah Steel Corp | Han Kook vs. Ni Steel | Han Kook vs. Korea Steel 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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