Correlation Between Doosan Fuel and Naver
Can any of the company-specific risk be diversified away by investing in both Doosan Fuel and Naver 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 Fuel and Naver into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Doosan Fuel Cell and Naver, you can compare the effects of market volatilities on Doosan Fuel and Naver 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 Fuel with a short position of Naver. Check out your portfolio center. Please also check ongoing floating volatility patterns of Doosan Fuel and Naver.
Diversification Opportunities for Doosan Fuel and Naver
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Doosan and Naver is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Doosan Fuel Cell and Naver in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Naver and Doosan Fuel 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 Fuel Cell are associated (or correlated) with Naver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Naver has no effect on the direction of Doosan Fuel i.e., Doosan Fuel and Naver go up and down completely randomly.
Pair Corralation between Doosan Fuel and Naver
Assuming the 90 days trading horizon Doosan Fuel Cell is expected to under-perform the Naver. In addition to that, Doosan Fuel is 1.34 times more volatile than Naver. It trades about -0.05 of its total potential returns per unit of risk. Naver is currently generating about 0.01 per unit of volatility. If you would invest 19,150,000 in Naver on August 25, 2024 and sell it today you would lose (150,000) from holding Naver or give up 0.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Doosan Fuel Cell vs. Naver
Performance |
| Timeline |
| Doosan Fuel Cell |
| Naver |
Doosan Fuel and Naver Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Doosan Fuel and Naver
The main advantage of trading using opposite Doosan Fuel and Naver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Doosan Fuel position performs unexpectedly, Naver 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 Naver will offset losses from the drop in Naver's long position.| Doosan Fuel vs. LS Electric | Doosan Fuel vs. Hanjinkal | Doosan Fuel vs. Busan Industrial Co | Doosan Fuel vs. Busan Ind |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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