Correlation Between Doosan Fuel and Woorim Machinery
Can any of the company-specific risk be diversified away by investing in both Doosan Fuel and Woorim Machinery 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 Woorim Machinery 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 Woorim Machinery Co, you can compare the effects of market volatilities on Doosan Fuel and Woorim Machinery 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 Woorim Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Doosan Fuel and Woorim Machinery.
Diversification Opportunities for Doosan Fuel and Woorim Machinery
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Doosan and Woorim is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Doosan Fuel Cell and Woorim Machinery Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woorim Machinery 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 Woorim Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Woorim Machinery has no effect on the direction of Doosan Fuel i.e., Doosan Fuel and Woorim Machinery go up and down completely randomly.
Pair Corralation between Doosan Fuel and Woorim Machinery
Assuming the 90 days trading horizon Doosan Fuel Cell is expected to generate 1.07 times more return on investment than Woorim Machinery. However, Doosan Fuel is 1.07 times more volatile than Woorim Machinery Co. It trades about -0.03 of its potential returns per unit of risk. Woorim Machinery Co is currently generating about -0.1 per unit of risk. If you would invest 1,851,000 in Doosan Fuel Cell on September 12, 2024 and sell it today you would lose (162,000) from holding Doosan Fuel Cell or give up 8.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Doosan Fuel Cell vs. Woorim Machinery Co
Performance |
| Timeline |
| Doosan Fuel Cell |
| Woorim Machinery |
Doosan Fuel and Woorim Machinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Doosan Fuel and Woorim Machinery
The main advantage of trading using opposite Doosan Fuel and Woorim Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Doosan Fuel position performs unexpectedly, Woorim Machinery 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 Woorim Machinery will offset losses from the drop in Woorim Machinery's long position.| Doosan Fuel vs. SAMG Entertainment Co | Doosan Fuel vs. ChipsMedia | Doosan Fuel vs. Daewon Media Co | Doosan Fuel vs. KIWI Media Group |
| Woorim Machinery vs. Korea New Network | Woorim Machinery vs. Solution Advanced Technology | Woorim Machinery vs. Busan Industrial Co | Woorim Machinery 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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