Correlation Between BooKook Steel and J Steel

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

Diversification Opportunities for BooKook Steel and J Steel

-0.45

Correlation Coefficient

BooKook Steel  J Steel

Very good diversification

The 3 months correlation between BooKook and 023440 is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding BooKook Steel Co and J Steel Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on J Steel 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 J Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of J Steel has no effect on the direction of BooKook Steel i.e., BooKook Steel and J Steel go up and down completely randomly.

Pair Corralation between BooKook Steel and J Steel

Assuming the 90 days trading horizon BooKook Steel Co is expected to under-perform the J Steel. But the stock apears to be less risky and, when comparing its historical volatility, BooKook Steel Co is 2.57 times less risky than J Steel. The stock trades about -0.01 of its potential returns per unit of risk. The J Steel Co is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  130,400  in J Steel Co on September 18, 2024 and sell it today you would earn a total of  55,000  from holding J Steel Co or generate 42.18% 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 Co  vs.  J Steel Co

BooKook Steel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BooKook Steel Co 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.

J Steel

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in J Steel Co are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, J Steel sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BooKook Steel and J Steel

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

The idea behind BooKook Steel Co and J Steel 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.