Correlation Between Doosan Fuel and Lotte Data
Can any of the company-specific risk be diversified away by investing in both Doosan Fuel and Lotte Data 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 Lotte Data 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 Lotte Data Communication, you can compare the effects of market volatilities on Doosan Fuel and Lotte Data 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 Lotte Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of Doosan Fuel and Lotte Data.
Diversification Opportunities for Doosan Fuel and Lotte Data
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Doosan and Lotte is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Doosan Fuel Cell and Lotte Data Communication in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotte Data Communication 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 Lotte Data. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotte Data Communication has no effect on the direction of Doosan Fuel i.e., Doosan Fuel and Lotte Data go up and down completely randomly.
Pair Corralation between Doosan Fuel and Lotte Data
Assuming the 90 days trading horizon Doosan Fuel Cell is expected to under-perform the Lotte Data. But the stock apears to be less risky and, when comparing its historical volatility, Doosan Fuel Cell is 1.09 times less risky than Lotte Data. The stock trades about -0.02 of its potential returns per unit of risk. The Lotte Data Communication is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 2,564,982 in Lotte Data Communication on September 12, 2024 and sell it today you would lose (714,982) from holding Lotte Data Communication or give up 27.87% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Doosan Fuel Cell vs. Lotte Data Communication
Performance |
| Timeline |
| Doosan Fuel Cell |
| Lotte Data Communication |
Doosan Fuel and Lotte Data Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Doosan Fuel and Lotte Data
The main advantage of trading using opposite Doosan Fuel and Lotte Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Doosan Fuel position performs unexpectedly, Lotte Data 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 Lotte Data will offset losses from the drop in Lotte Data'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 |
| Lotte Data vs. SK Holdings Co | Lotte Data vs. Solution Advanced Technology | Lotte Data vs. Busan Industrial Co | Lotte Data 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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