Correlation Between Doosan Fuel and Echomarketing CoLtd
Can any of the company-specific risk be diversified away by investing in both Doosan Fuel and Echomarketing CoLtd 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 Echomarketing CoLtd 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 Echomarketing CoLtd, you can compare the effects of market volatilities on Doosan Fuel and Echomarketing CoLtd 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 Echomarketing CoLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Doosan Fuel and Echomarketing CoLtd.
Diversification Opportunities for Doosan Fuel and Echomarketing CoLtd
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Doosan and Echomarketing is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Doosan Fuel Cell and Echomarketing CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Echomarketing CoLtd 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 Echomarketing CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Echomarketing CoLtd has no effect on the direction of Doosan Fuel i.e., Doosan Fuel and Echomarketing CoLtd go up and down completely randomly.
Pair Corralation between Doosan Fuel and Echomarketing CoLtd
Assuming the 90 days trading horizon Doosan Fuel Cell is expected to under-perform the Echomarketing CoLtd. In addition to that, Doosan Fuel is 1.2 times more volatile than Echomarketing CoLtd. It trades about -0.01 of its total potential returns per unit of risk. Echomarketing CoLtd is currently generating about 0.02 per unit of volatility. If you would invest 954,528 in Echomarketing CoLtd on August 29, 2024 and sell it today you would earn a total of 29,472 from holding Echomarketing CoLtd or generate 3.09% 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. Echomarketing CoLtd
Performance |
| Timeline |
| Doosan Fuel Cell |
| Echomarketing CoLtd |
Doosan Fuel and Echomarketing CoLtd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Doosan Fuel and Echomarketing CoLtd
The main advantage of trading using opposite Doosan Fuel and Echomarketing CoLtd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Doosan Fuel position performs unexpectedly, Echomarketing CoLtd 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 Echomarketing CoLtd will offset losses from the drop in Echomarketing CoLtd's long position.| Doosan Fuel vs. LS Electric | Doosan Fuel vs. Busan Industrial Co | Doosan Fuel vs. Busan Ind | Doosan Fuel vs. Mirae Asset Daewoo |
| Echomarketing CoLtd vs. Korea New Network | Echomarketing CoLtd vs. Busan Industrial Co | Echomarketing CoLtd vs. Busan Ind | Echomarketing CoLtd vs. Shinhan WTI Futures |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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