Correlation Between Industrial Bank and Doosan Fuel
Can any of the company-specific risk be diversified away by investing in both Industrial Bank 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 Industrial Bank and Doosan Fuel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Industrial Bank and Doosan Fuel Cell, you can compare the effects of market volatilities on Industrial Bank 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 Industrial Bank with a short position of Doosan Fuel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Industrial Bank and Doosan Fuel.
Diversification Opportunities for Industrial Bank and Doosan Fuel
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Industrial and Doosan is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Industrial Bank 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 Industrial Bank 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 Industrial Bank 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 Industrial Bank i.e., Industrial Bank and Doosan Fuel go up and down completely randomly.
Pair Corralation between Industrial Bank and Doosan Fuel
Assuming the 90 days trading horizon Industrial Bank is expected to generate 0.43 times more return on investment than Doosan Fuel. However, Industrial Bank is 2.35 times less risky than Doosan Fuel. It trades about 0.09 of its potential returns per unit of risk. Doosan Fuel Cell is currently generating about -0.03 per unit of risk. If you would invest 926,001 in Industrial Bank on August 29, 2024 and sell it today you would earn a total of 564,999 from holding Industrial Bank or generate 61.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Industrial Bank vs. Doosan Fuel Cell
Performance |
| Timeline |
| Industrial Bank |
| Doosan Fuel Cell |
Industrial Bank and Doosan Fuel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Industrial Bank and Doosan Fuel
The main advantage of trading using opposite Industrial Bank and Doosan Fuel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Industrial Bank 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.| Industrial Bank vs. TOPMATERIAL LTD | Industrial Bank vs. LS Materials | Industrial Bank vs. Taegu Broadcasting | Industrial Bank vs. Top Material Co |
| Doosan Fuel vs. LS Electric | Doosan Fuel vs. Busan Industrial Co | Doosan Fuel vs. Busan Ind | Doosan Fuel vs. Mirae Asset Daewoo |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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