Correlation Between BooKook Steel and Cosmecca Korea
Can any of the company-specific risk be diversified away by investing in both BooKook Steel and Cosmecca Korea 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 Cosmecca Korea 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 Cosmecca Korea Co, you can compare the effects of market volatilities on BooKook Steel and Cosmecca Korea 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 Cosmecca Korea. Check out your portfolio center. Please also check ongoing floating volatility patterns of BooKook Steel and Cosmecca Korea.
Diversification Opportunities for BooKook Steel and Cosmecca Korea
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BooKook and Cosmecca is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding BooKook Steel Co and Cosmecca Korea Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cosmecca Korea 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 Cosmecca Korea. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cosmecca Korea has no effect on the direction of BooKook Steel i.e., BooKook Steel and Cosmecca Korea go up and down completely randomly.
Pair Corralation between BooKook Steel and Cosmecca Korea
Assuming the 90 days trading horizon BooKook Steel Co is expected to under-perform the Cosmecca Korea. But the stock apears to be less risky and, when comparing its historical volatility, BooKook Steel Co is 2.08 times less risky than Cosmecca Korea. The stock trades about -0.1 of its potential returns per unit of risk. The Cosmecca Korea Co is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 7,090,000 in Cosmecca Korea Co on September 14, 2024 and sell it today you would lose (1,760,000) from holding Cosmecca Korea Co or give up 24.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BooKook Steel Co vs. Cosmecca Korea Co
Performance |
| Timeline |
| BooKook Steel |
| Cosmecca Korea |
BooKook Steel and Cosmecca Korea Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BooKook Steel and Cosmecca Korea
The main advantage of trading using opposite BooKook Steel and Cosmecca Korea positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BooKook Steel position performs unexpectedly, Cosmecca Korea 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 Cosmecca Korea will offset losses from the drop in Cosmecca Korea'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 |
| Cosmecca Korea vs. Kisan Telecom Co | Cosmecca Korea vs. BooKook Steel Co | Cosmecca Korea vs. Samhyun Steel Co | Cosmecca Korea vs. Handok Clean Tech |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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