Correlation Between Bookook Steel and Samsung CT

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

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

Diversification Opportunities for Bookook Steel and Samsung CT

0.46

Correlation Coefficient

Bookook Steel  Samsung CT

Very weak diversification

The 3 months correlation between Bookook and Samsung is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Bookook Steel and Samsung CT Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung CT Corp 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 Samsung CT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samsung CT Corp has no effect on the direction of Bookook Steel i.e., Bookook Steel and Samsung CT go up and down completely randomly.

Pair Corralation between Bookook Steel and Samsung CT

Assuming the 90 days trading horizon Bookook Steel is expected to generate 0.64 times more return on investment than Samsung CT. However, Bookook Steel is 1.55 times less risky than Samsung CT. It trades about -0.07 of its potential returns per unit of risk. Samsung CT Corp is currently generating about -0.19 per unit of risk. If you would invest  255,000  in Bookook Steel on September 3, 2024 and sell it today you would lose (17,000) from holding Bookook Steel or give up 6.67% of portfolio value over 90 days.

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

Bookook Steel  vs.  Samsung CT Corp

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 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.

Samsung CT Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Samsung CT Corp 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 Samsung CT

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

The idea behind Bookook Steel and Samsung CT Corp 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.