Correlation Between Bookook Steel and Nable Communications

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

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

Diversification Opportunities for Bookook Steel and Nable Communications

-0.53

Correlation Coefficient

Bookook Steel  Nable Communications

Excellent diversification

The 3 months correlation between Bookook and Nable is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Bookook Steel and Nable Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nable Communications 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 Nable Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nable Communications has no effect on the direction of Bookook Steel i.e., Bookook Steel and Nable Communications go up and down completely randomly.

Pair Corralation between Bookook Steel and Nable Communications

Assuming the 90 days trading horizon Bookook Steel is expected to under-perform the Nable Communications. In addition to that, Bookook Steel is 1.51 times more volatile than Nable Communications. It trades about -0.01 of its total potential returns per unit of risk. Nable Communications is currently generating about 0.06 per unit of volatility. If you would invest  649,000  in Nable Communications on September 22, 2024 and sell it today you would earn a total of  30,000  from holding Nable Communications or generate 4.62% return on investment over 90 days.

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

Bookook Steel  vs.  Nable Communications

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.

Nable Communications

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nable Communications are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Nable Communications 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 Nable Communications

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

The idea behind Bookook Steel and Nable Communications 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.