Correlation Between Korea Zinc and Doosan Fuel
Can any of the company-specific risk be diversified away by investing in both Korea Zinc and Doosan Fuel 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 Fuel 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 Fuel Cell, you can compare the effects of market volatilities on Korea Zinc and Doosan Fuel 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 Fuel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Zinc and Doosan Fuel.
Diversification Opportunities for Korea Zinc and Doosan Fuel
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Korea and Doosan is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Korea Zinc and Doosan Fuel Cell in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Doosan Fuel Cell 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 Fuel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Doosan Fuel Cell has no effect on the direction of Korea Zinc i.e., Korea Zinc and Doosan Fuel go up and down completely randomly.
Pair Corralation between Korea Zinc and Doosan Fuel
Assuming the 90 days trading horizon Korea Zinc is expected to generate 3.45 times less return on investment than Doosan Fuel. But when comparing it to its historical volatility, Korea Zinc is 2.26 times less risky than Doosan Fuel. It trades about 0.01 of its potential returns per unit of risk. Doosan Fuel Cell is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,767,000 in Doosan Fuel Cell on September 4, 2024 and sell it today you would lose (14,000) from holding Doosan Fuel Cell or give up 0.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Zinc vs. Doosan Fuel Cell
Performance |
| Timeline |
| Korea Zinc |
| Doosan Fuel Cell |
Korea Zinc and Doosan Fuel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Zinc and Doosan Fuel
The main advantage of trading using opposite Korea Zinc and Doosan Fuel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Zinc position performs unexpectedly, Doosan Fuel 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 Fuel will offset losses from the drop in Doosan Fuel's long position.| Korea Zinc vs. Neungyule Education | Korea Zinc vs. Iljin Display | Korea Zinc vs. Digital Multimedia Technology | Korea Zinc vs. SM Entertainment Co |
| Doosan Fuel vs. Dong A Steel Technology | Doosan Fuel vs. KG Eco Technology | Doosan Fuel vs. Kakao Games Corp | Doosan Fuel vs. DB Financial Investment |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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