Correlation Between Doosan Fuel and ABCO Electronics
Can any of the company-specific risk be diversified away by investing in both Doosan Fuel and ABCO Electronics 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 ABCO Electronics 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 ABCO Electronics Co, you can compare the effects of market volatilities on Doosan Fuel and ABCO Electronics 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 ABCO Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Doosan Fuel and ABCO Electronics.
Diversification Opportunities for Doosan Fuel and ABCO Electronics
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Doosan and ABCO is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Doosan Fuel Cell and ABCO Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABCO Electronics 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 ABCO Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABCO Electronics has no effect on the direction of Doosan Fuel i.e., Doosan Fuel and ABCO Electronics go up and down completely randomly.
Pair Corralation between Doosan Fuel and ABCO Electronics
Assuming the 90 days trading horizon Doosan Fuel Cell is expected to generate 1.63 times more return on investment than ABCO Electronics. However, Doosan Fuel is 1.63 times more volatile than ABCO Electronics Co. It trades about 0.09 of its potential returns per unit of risk. ABCO Electronics Co is currently generating about -0.17 per unit of risk. If you would invest 1,715,000 in Doosan Fuel Cell on September 2, 2024 and sell it today you would earn a total of 131,000 from holding Doosan Fuel Cell or generate 7.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Doosan Fuel Cell vs. ABCO Electronics Co
Performance |
| Timeline |
| Doosan Fuel Cell |
| ABCO Electronics |
Doosan Fuel and ABCO Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Doosan Fuel and ABCO Electronics
The main advantage of trading using opposite Doosan Fuel and ABCO Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Doosan Fuel position performs unexpectedly, ABCO Electronics 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 ABCO Electronics will offset losses from the drop in ABCO Electronics' long position.| Doosan Fuel vs. SK Chemicals Co | Doosan Fuel vs. ECSTELECOM Co | Doosan Fuel vs. Digital Power Communications | Doosan Fuel vs. Miwon Chemicals Co |
| ABCO Electronics vs. Dongsin Engineering Construction | ABCO Electronics vs. Doosan Fuel Cell | ABCO Electronics vs. Daishin Balance 1 | ABCO Electronics vs. Total Soft Bank |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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