Correlation Between Bookook Steel and Duksan Hi

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

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

Diversification Opportunities for Bookook Steel and Duksan Hi

0.92

Correlation Coefficient

Bookook Steel  Duksan Hi

Almost no diversification

The 3 months correlation between Bookook and Duksan is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Bookook Steel and Duksan Hi Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Duksan Hi Metal 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 are associated (or correlated) with Duksan Hi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Duksan Hi Metal has no effect on the direction of Bookook Steel i.e., Bookook Steel and Duksan Hi go up and down completely randomly.

Pair Corralation between Bookook Steel and Duksan Hi

Assuming the 90 days trading horizon Bookook Steel is expected to under-perform the Duksan Hi. But the stock apears to be less risky and, when comparing its historical volatility, Bookook Steel is 1.69 times less risky than Duksan Hi. The stock trades about -0.13 of its potential returns per unit of risk. The Duksan Hi Metal is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  767,000  in Duksan Hi Metal on September 25, 2024 and sell it today you would lose (375,000) from holding Duksan Hi Metal or give up 48.89% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Bookook Steel  vs.  Duksan Hi Metal

Bookook Steel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bookook Steel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Bookook Steel is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Duksan Hi Metal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Duksan Hi Metal 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 January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Bookook Steel and Duksan Hi

The main advantage of trading using opposite Bookook Steel and Duksan Hi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bookook Steel position performs unexpectedly, Duksan Hi 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 Duksan Hi will offset losses from the drop in Duksan Hi's long position.

The idea behind Bookook Steel and Duksan Hi Metal 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.