Correlation Between Bookook Steel and FNC Entertainment

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

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

Diversification Opportunities for Bookook Steel and FNC Entertainment

0.16

Correlation Coefficient

Bookook Steel  FNC Entertainment

Average diversification

The 3 months correlation between Bookook and FNC is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Bookook Steel and FNC Entertainment Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FNC Entertainment 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 FNC Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FNC Entertainment has no effect on the direction of Bookook Steel i.e., Bookook Steel and FNC Entertainment go up and down completely randomly.

Pair Corralation between Bookook Steel and FNC Entertainment

Assuming the 90 days trading horizon Bookook Steel is expected to generate 0.78 times more return on investment than FNC Entertainment. However, Bookook Steel is 1.28 times less risky than FNC Entertainment. It trades about 0.04 of its potential returns per unit of risk. FNC Entertainment Co is currently generating about 0.03 per unit of risk. If you would invest  242,500  in Bookook Steel on December 26, 2024 and sell it today you would earn a total of  10,000  from holding Bookook Steel or generate 4.12% return on investment over 90 days.

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

Bookook Steel  vs.  FNC Entertainment Co

Bookook Steel

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bookook Steel are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. 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.

FNC Entertainment

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in FNC Entertainment Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, FNC Entertainment is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Bookook Steel and FNC Entertainment

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

The idea behind Bookook Steel and FNC Entertainment 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.

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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .