Correlation Between Bookook Steel and Jayjun

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

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

Diversification Opportunities for Bookook Steel and Jayjun

0.9

Correlation Coefficient

Bookook Steel  Jayjun

Almost no diversification

The 3 months correlation between Bookook and Jayjun is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Bookook Steel and Jayjun Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jayjun 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 Jayjun. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jayjun has no effect on the direction of Bookook Steel i.e., Bookook Steel and Jayjun go up and down completely randomly.

Pair Corralation between Bookook Steel and Jayjun

Assuming the 90 days trading horizon Bookook Steel is expected to generate 0.74 times more return on investment than Jayjun. However, Bookook Steel is 1.35 times less risky than Jayjun. It trades about -0.04 of its potential returns per unit of risk. Jayjun Co is currently generating about -0.15 per unit of risk. If you would invest  251,500  in Bookook Steel on September 14, 2024 and sell it today you would lose (13,000) from holding Bookook Steel or give up 5.17% 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.  Jayjun 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.

Jayjun

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jayjun Co 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 Jayjun

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

The idea behind Bookook Steel and Jayjun 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.