Correlation Between BooKook Steel and Ecoplastic

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

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

Diversification Opportunities for BooKook Steel and Ecoplastic

0.63

Correlation Coefficient

BooKook Steel  Ecoplastic

Poor diversification

The 3 months correlation between BooKook and Ecoplastic is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding BooKook Steel Co and Ecoplastic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecoplastic 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 Co are associated (or correlated) with Ecoplastic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecoplastic has no effect on the direction of BooKook Steel i.e., BooKook Steel and Ecoplastic go up and down completely randomly.

Pair Corralation between BooKook Steel and Ecoplastic

Assuming the 90 days trading horizon BooKook Steel Co is expected to under-perform the Ecoplastic. But the stock apears to be less risky and, when comparing its historical volatility, BooKook Steel Co is 1.34 times less risky than Ecoplastic. The stock trades about 0.0 of its potential returns per unit of risk. The Ecoplastic is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  280,739  in Ecoplastic on October 23, 2024 and sell it today you would lose (28,739) from holding Ecoplastic or give up 10.24% of portfolio value over 90 days.

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

BooKook Steel Co  vs.  Ecoplastic

BooKook Steel

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BooKook Steel Co are ranked lower than 4 (%) 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 February 2025.

Ecoplastic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ecoplastic 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 Ecoplastic

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

The idea behind BooKook Steel Co and Ecoplastic 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.