Correlation Between Doosan Fuel and KMH Hitech
Can any of the company-specific risk be diversified away by investing in both Doosan Fuel and KMH Hitech 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 KMH Hitech 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 KMH Hitech Co, you can compare the effects of market volatilities on Doosan Fuel and KMH Hitech 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 KMH Hitech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Doosan Fuel and KMH Hitech.
Diversification Opportunities for Doosan Fuel and KMH Hitech
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Doosan and KMH is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Doosan Fuel Cell and KMH Hitech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KMH Hitech 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 KMH Hitech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KMH Hitech has no effect on the direction of Doosan Fuel i.e., Doosan Fuel and KMH Hitech go up and down completely randomly.
Pair Corralation between Doosan Fuel and KMH Hitech
Assuming the 90 days trading horizon Doosan Fuel Cell is expected to generate 2.2 times more return on investment than KMH Hitech. However, Doosan Fuel is 2.2 times more volatile than KMH Hitech Co. It trades about 0.02 of its potential returns per unit of risk. KMH Hitech Co is currently generating about -0.16 per unit of risk. If you would invest 1,844,000 in Doosan Fuel Cell on September 2, 2024 and sell it today you would earn a total of 2,000 from holding Doosan Fuel Cell or generate 0.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Doosan Fuel Cell vs. KMH Hitech Co
Performance |
| Timeline |
| Doosan Fuel Cell |
| KMH Hitech |
Doosan Fuel and KMH Hitech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Doosan Fuel and KMH Hitech
The main advantage of trading using opposite Doosan Fuel and KMH Hitech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Doosan Fuel position performs unexpectedly, KMH Hitech 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 KMH Hitech will offset losses from the drop in KMH Hitech's 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 |
| KMH Hitech vs. Dongsin Engineering Construction | KMH Hitech vs. Doosan Fuel Cell | KMH Hitech vs. Daishin Balance 1 | KMH Hitech 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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