Correlation Between Seoam Machinery and Doosan
Can any of the company-specific risk be diversified away by investing in both Seoam Machinery 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 Seoam Machinery and Doosan into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Seoam Machinery Industry and Doosan, you can compare the effects of market volatilities on Seoam Machinery 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 Seoam Machinery with a short position of Doosan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seoam Machinery and Doosan.
Diversification Opportunities for Seoam Machinery and Doosan
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Seoam and Doosan is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Seoam Machinery Industry and Doosan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Doosan and Seoam Machinery 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 Seoam Machinery Industry 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 Seoam Machinery i.e., Seoam Machinery and Doosan go up and down completely randomly.
Pair Corralation between Seoam Machinery and Doosan
Assuming the 90 days trading horizon Seoam Machinery Industry is expected to under-perform the Doosan. But the stock apears to be less risky and, when comparing its historical volatility, Seoam Machinery Industry is 1.66 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 16, 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 | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Seoam Machinery Industry vs. Doosan
Performance |
| Timeline |
| Seoam Machinery Industry |
| Doosan |
Seoam Machinery and Doosan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seoam Machinery and Doosan
The main advantage of trading using opposite Seoam Machinery and Doosan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seoam Machinery 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.| Seoam Machinery vs. Polaris Office Corp | Seoam Machinery vs. Korea Investment Holdings | Seoam Machinery vs. Worldex Industry Trading | Seoam Machinery vs. Korea Computer |
| Doosan vs. NH Investment Securities | Doosan vs. Hanshin Construction Co | Doosan vs. Stic Investments | Doosan vs. Seoam Machinery Industry |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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