Correlation Between BooKook Steel and DONGKUK TED

Can any of the company-specific risk be diversified away by investing in both BooKook Steel and DONGKUK TED 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 DONGKUK TED 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 DONGKUK TED METAL, you can compare the effects of market volatilities on BooKook Steel and DONGKUK TED 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 DONGKUK TED. Check out your portfolio center. Please also check ongoing floating volatility patterns of BooKook Steel and DONGKUK TED.

Diversification Opportunities for BooKook Steel and DONGKUK TED

0.74

Correlation Coefficient

BooKook Steel  DONGKUK TED

Poor diversification

The 3 months correlation between BooKook and DONGKUK is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding BooKook Steel Co and DONGKUK TED METAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DONGKUK TED 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 Co are associated (or correlated) with DONGKUK TED. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DONGKUK TED METAL has no effect on the direction of BooKook Steel i.e., BooKook Steel and DONGKUK TED go up and down completely randomly.

Pair Corralation between BooKook Steel and DONGKUK TED

Assuming the 90 days trading horizon BooKook Steel Co is expected to generate 1.22 times more return on investment than DONGKUK TED. However, BooKook Steel is 1.22 times more volatile than DONGKUK TED METAL. It trades about 0.06 of its potential returns per unit of risk. DONGKUK TED METAL is currently generating about 0.03 per unit of risk. If you would invest  240,075  in BooKook Steel Co on October 25, 2024 and sell it today you would earn a total of  15,925  from holding BooKook Steel Co or generate 6.63% return on investment over 90 days.

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

BooKook Steel Co  vs.  DONGKUK TED METAL

BooKook Steel

Risk-Adjusted Performance

4 of 100

Modest

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.

DONGKUK TED METAL

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in DONGKUK TED METAL are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, DONGKUK TED 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 DONGKUK TED

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

The idea behind BooKook Steel Co and DONGKUK TED 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.