Correlation Between Doosan Heavy and Histeel
Can any of the company-specific risk be diversified away by investing in both Doosan Heavy and Histeel 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 Doosan Heavy and Histeel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Doosan Heavy Ind and Histeel, you can compare the effects of market volatilities on Doosan Heavy and Histeel 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 Doosan Heavy with a short position of Histeel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Doosan Heavy and Histeel.
Diversification Opportunities for Doosan Heavy and Histeel
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Doosan and Histeel is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Doosan Heavy Ind and Histeel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Histeel and Doosan Heavy 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 Doosan Heavy Ind are associated (or correlated) with Histeel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Histeel has no effect on the direction of Doosan Heavy i.e., Doosan Heavy and Histeel go up and down completely randomly.
Pair Corralation between Doosan Heavy and Histeel
Assuming the 90 days trading horizon Doosan Heavy Ind is expected to generate 0.72 times more return on investment than Histeel. However, Doosan Heavy Ind is 1.39 times less risky than Histeel. It trades about 0.02 of its potential returns per unit of risk. Histeel is currently generating about 0.0 per unit of risk. If you would invest 1,565,000 in Doosan Heavy Ind on September 12, 2024 and sell it today you would earn a total of 153,000 from holding Doosan Heavy Ind or generate 9.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Doosan Heavy Ind vs. Histeel
Performance |
| Timeline |
| Doosan Heavy Ind |
| Histeel |
Doosan Heavy and Histeel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Doosan Heavy and Histeel
The main advantage of trading using opposite Doosan Heavy and Histeel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Doosan Heavy position performs unexpectedly, Histeel 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 Histeel will offset losses from the drop in Histeel's long position.| Doosan Heavy vs. Histeel | Doosan Heavy vs. Alton Sports CoLtd | Doosan Heavy vs. Hankuk Steel Wire | Doosan Heavy vs. Samhyun Steel Co |
| Histeel vs. LG Chemicals | Histeel vs. POSCO Holdings | Histeel vs. Hanwha Solutions | Histeel vs. Lotte Chemical Corp |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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