Correlation Between Ni Steel and Bookook Steel

Can any of the company-specific risk be diversified away by investing in both Ni Steel 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 Ni Steel and Bookook Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ni Steel and Bookook Steel, you can compare the effects of market volatilities on Ni Steel 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 Ni Steel with a short position of Bookook Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ni Steel and Bookook Steel.

Diversification Opportunities for Ni Steel and Bookook Steel

-0.22

Correlation Coefficient

Ni Steel  Bookook Steel

Very good diversification

The 3 months correlation between 008260 and Bookook is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Ni Steel and Bookook Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bookook Steel and Ni 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 Ni Steel 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 Ni Steel i.e., Ni Steel and Bookook Steel go up and down completely randomly.

Pair Corralation between Ni Steel and Bookook Steel

Assuming the 90 days trading horizon Ni Steel is expected to under-perform the Bookook Steel. But the stock apears to be less risky and, when comparing its historical volatility, Ni Steel is 1.32 times less risky than Bookook Steel. The stock trades about -0.12 of its potential returns per unit of risk. The Bookook Steel is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  227,465  in Bookook Steel on November 20, 2024 and sell it today you would earn a total of  23,035  from holding Bookook Steel or generate 10.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Ni Steel  vs.  Bookook Steel

Ni Steel

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ni Steel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Bookook Steel

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bookook Steel are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Bookook Steel may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Ni Steel and Bookook Steel

The main advantage of trading using opposite Ni Steel and Bookook Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ni Steel 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.

The idea behind Ni Steel and Bookook Steel pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.