Correlation Between Cheryong Industrial and Bookook Steel
Can any of the company-specific risk be diversified away by investing in both Cheryong Industrial and Bookook 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 Cheryong Industrial and Bookook Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cheryong Industrial CoLtd and Bookook Steel, you can compare the effects of market volatilities on Cheryong Industrial and Bookook 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 Cheryong Industrial with a short position of Bookook Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cheryong Industrial and Bookook Steel.
Diversification Opportunities for Cheryong Industrial and Bookook Steel
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cheryong and Bookook is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Cheryong Industrial CoLtd and Bookook Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bookook Steel and Cheryong Industrial 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 Cheryong Industrial CoLtd are associated (or correlated) with Bookook Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bookook Steel has no effect on the direction of Cheryong Industrial i.e., Cheryong Industrial and Bookook Steel go up and down completely randomly.
Pair Corralation between Cheryong Industrial and Bookook Steel
Assuming the 90 days trading horizon Cheryong Industrial CoLtd is expected to generate 1.47 times more return on investment than Bookook Steel. However, Cheryong Industrial is 1.47 times more volatile than Bookook Steel. It trades about 0.05 of its potential returns per unit of risk. Bookook Steel is currently generating about -0.01 per unit of risk. If you would invest 306,477 in Cheryong Industrial CoLtd on September 3, 2024 and sell it today you would earn a total of 207,523 from holding Cheryong Industrial CoLtd or generate 67.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cheryong Industrial CoLtd vs. Bookook Steel
Performance |
| Timeline |
| Cheryong Industrial CoLtd |
| Bookook Steel |
Cheryong Industrial and Bookook Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cheryong Industrial and Bookook Steel
The main advantage of trading using opposite Cheryong Industrial and Bookook Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cheryong Industrial position performs unexpectedly, Bookook 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 Bookook Steel will offset losses from the drop in Bookook Steel's long position.| Cheryong Industrial vs. SEOJEON ELECTRIC MACHINERY | Cheryong Industrial vs. NH Investment Securities | Cheryong Industrial vs. Keyang Electric Machinery | Cheryong Industrial vs. Atinum Investment Co |
| Bookook Steel vs. Seah Steel Corp | Bookook Steel vs. Ni Steel | Bookook Steel vs. Korea Steel Co | Bookook Steel vs. Finebesteel |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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