Correlation Between Bookook Steel and Dongil Metal

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

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

Diversification Opportunities for Bookook Steel and Dongil Metal

0.81

Correlation Coefficient

Bookook Steel  Dongil Metal

Very poor diversification

The 3 months correlation between Bookook and Dongil is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Bookook Steel and Dongil Metal Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongil 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 Dongil Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongil Metal has no effect on the direction of Bookook Steel i.e., Bookook Steel and Dongil Metal go up and down completely randomly.

Pair Corralation between Bookook Steel and Dongil Metal

Assuming the 90 days trading horizon Bookook Steel is expected to under-perform the Dongil Metal. In addition to that, Bookook Steel is 2.14 times more volatile than Dongil Metal Co. It trades about -0.13 of its total potential returns per unit of risk. Dongil Metal Co is currently generating about -0.07 per unit of volatility. If you would invest  930,000  in Dongil Metal Co on September 25, 2024 and sell it today you would lose (139,000) from holding Dongil Metal Co or give up 14.95% of portfolio value over 90 days.

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

Bookook Steel  vs.  Dongil Metal Co

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.

Dongil Metal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dongil Metal Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Bookook Steel and Dongil Metal

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

The idea behind Bookook Steel and Dongil Metal Co 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.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.