Correlation Between Iljin Materials and Doosan
Can any of the company-specific risk be diversified away by investing in both Iljin Materials 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 Iljin Materials and Doosan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Iljin Materials Co and Doosan, you can compare the effects of market volatilities on Iljin Materials 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 Iljin Materials with a short position of Doosan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iljin Materials and Doosan.
Diversification Opportunities for Iljin Materials and Doosan
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Iljin and Doosan is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Iljin Materials Co and Doosan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Doosan and Iljin Materials 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 Iljin Materials 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 Iljin Materials i.e., Iljin Materials and Doosan go up and down completely randomly.
Pair Corralation between Iljin Materials and Doosan
Assuming the 90 days trading horizon Iljin Materials Co is expected to under-perform the Doosan. But the stock apears to be less risky and, when comparing its historical volatility, Iljin Materials Co is 1.27 times less risky than Doosan. The stock trades about -0.03 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 15, 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 | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Iljin Materials Co vs. Doosan
Performance |
| Timeline |
| Iljin Materials |
| Doosan |
Iljin Materials and Doosan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Iljin Materials and Doosan
The main advantage of trading using opposite Iljin Materials and Doosan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iljin Materials 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.| Iljin Materials vs. Samsung Electronics Co | Iljin Materials vs. Samsung Electronics Co | Iljin Materials vs. LG Energy Solution | Iljin Materials vs. SK Hynix |
| Doosan vs. Lotte Chilsung Beverage | Doosan vs. TOPMATERIAL LTD | Doosan vs. Daewon Media Co | Doosan vs. Iljin Materials 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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