Correlation Between BooKook Steel and Daedong Steel
Can any of the company-specific risk be diversified away by investing in both BooKook Steel and Daedong Steel 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 Daedong Steel 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 Daedong Steel Co, you can compare the effects of market volatilities on BooKook Steel and Daedong Steel 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 Daedong Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of BooKook Steel and Daedong Steel.
Diversification Opportunities for BooKook Steel and Daedong Steel
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between BooKook and Daedong is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding BooKook Steel Co and Daedong Steel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daedong 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 Daedong Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daedong Steel has no effect on the direction of BooKook Steel i.e., BooKook Steel and Daedong Steel go up and down completely randomly.
Pair Corralation between BooKook Steel and Daedong Steel
Assuming the 90 days trading horizon BooKook Steel Co is expected to generate 0.67 times more return on investment than Daedong Steel. However, BooKook Steel Co is 1.48 times less risky than Daedong Steel. It trades about 0.05 of its potential returns per unit of risk. Daedong Steel Co is currently generating about -0.01 per unit of risk. If you would invest 233,500 in BooKook Steel Co on September 14, 2024 and sell it today you would earn a total of 5,000 from holding BooKook Steel Co or generate 2.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
BooKook Steel Co vs. Daedong Steel Co
Performance |
| Timeline |
| BooKook Steel |
| Daedong Steel |
BooKook Steel and Daedong Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BooKook Steel and Daedong Steel
The main advantage of trading using opposite BooKook Steel and Daedong Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BooKook Steel position performs unexpectedly, Daedong Steel 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 Daedong Steel will offset losses from the drop in Daedong Steel'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 |
| Daedong Steel vs. Keum Kang Steel | Daedong Steel vs. Samhyun Steel Co | Daedong Steel vs. Gyeongnam Steel Co | Daedong Steel vs. Jeil Steel Mfg |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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