Correlation Between Korea Zinc and Doosan
Can any of the company-specific risk be diversified away by investing in both Korea Zinc 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 Korea Zinc and Doosan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea Zinc and Doosan, you can compare the effects of market volatilities on Korea Zinc 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 Korea Zinc with a short position of Doosan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Zinc and Doosan.
Diversification Opportunities for Korea Zinc and Doosan
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Korea and Doosan is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Korea Zinc and Doosan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Doosan and Korea Zinc 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 Korea Zinc 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 Korea Zinc i.e., Korea Zinc and Doosan go up and down completely randomly.
Pair Corralation between Korea Zinc and Doosan
Assuming the 90 days trading horizon Korea Zinc is expected to under-perform the Doosan. But the stock apears to be less risky and, when comparing its historical volatility, Korea Zinc is 2.72 times less risky than Doosan. The stock trades about -0.15 of its potential returns per unit of risk. The Doosan is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 20,950,000 in Doosan on August 29, 2024 and sell it today you would lose (1,290,000) from holding Doosan or give up 6.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Zinc vs. Doosan
Performance |
| Timeline |
| Korea Zinc |
| Doosan |
Korea Zinc and Doosan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Zinc and Doosan
The main advantage of trading using opposite Korea Zinc and Doosan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Zinc 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.| Korea Zinc vs. Sungdo Engineering Construction | Korea Zinc vs. Tuksu Engineering ConstructionLtd | Korea Zinc vs. Hanshin Construction Co | Korea Zinc vs. KIWI Media Group |
| Doosan vs. BGF Retail Co | Doosan vs. Woorim Machinery Co | Doosan vs. Nam Hwa Construction | Doosan vs. Innowireless Co |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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