Correlation Between Hanshin Construction and Doosan
Can any of the company-specific risk be diversified away by investing in both Hanshin Construction and Doosan 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 Hanshin Construction and Doosan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hanshin Construction Co and Doosan, you can compare the effects of market volatilities on Hanshin Construction and Doosan 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 Hanshin Construction with a short position of Doosan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanshin Construction and Doosan.
Diversification Opportunities for Hanshin Construction and Doosan
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hanshin and Doosan is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Hanshin Construction Co and Doosan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Doosan and Hanshin Construction 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 Hanshin Construction Co are associated (or correlated) with Doosan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Doosan has no effect on the direction of Hanshin Construction i.e., Hanshin Construction and Doosan go up and down completely randomly.
Pair Corralation between Hanshin Construction and Doosan
Assuming the 90 days trading horizon Hanshin Construction Co is expected to under-perform the Doosan. But the stock apears to be less risky and, when comparing its historical volatility, Hanshin Construction Co is 2.13 times less risky than Doosan. The stock trades about -0.01 of its potential returns per unit of risk. The Doosan is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 7,985,232 in Doosan on September 16, 2024 and sell it today you would earn a total of 16,464,768 from holding Doosan or generate 206.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hanshin Construction Co vs. Doosan
Performance |
| Timeline |
| Hanshin Construction |
| Doosan |
Hanshin Construction and Doosan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanshin Construction and Doosan
The main advantage of trading using opposite Hanshin Construction and Doosan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanshin Construction position performs unexpectedly, Doosan 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 Doosan will offset losses from the drop in Doosan's long position.| Hanshin Construction vs. Samsung Electronics Co | Hanshin Construction vs. Samsung Electronics Co | Hanshin Construction vs. SK Hynix | Hanshin Construction vs. POSCO Holdings |
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Check out your portfolio center.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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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