Correlation Between Doosan Bobcat and Grand Korea

Can any of the company-specific risk be diversified away by investing in both Doosan Bobcat and Grand Korea 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 Bobcat and Grand Korea into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Doosan Bobcat and Grand Korea Leisure, you can compare the effects of market volatilities on Doosan Bobcat and Grand Korea 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 Bobcat with a short position of Grand Korea. Check out your portfolio center. Please also check ongoing floating volatility patterns of Doosan Bobcat and Grand Korea.

Diversification Opportunities for Doosan Bobcat and Grand Korea

0.23

Correlation Coefficient

Doosan Bobcat  Grand Korea

Modest diversification

The 3 months correlation between Doosan and Grand is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Doosan Bobcat and Grand Korea Leisure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grand Korea Leisure and Doosan Bobcat 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 Bobcat are associated (or correlated) with Grand Korea. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grand Korea Leisure has no effect on the direction of Doosan Bobcat i.e., Doosan Bobcat and Grand Korea go up and down completely randomly.

Pair Corralation between Doosan Bobcat and Grand Korea

Assuming the 90 days trading horizon Doosan Bobcat is expected to generate 1.66 times more return on investment than Grand Korea. However, Doosan Bobcat is 1.66 times more volatile than Grand Korea Leisure. It trades about -0.01 of its potential returns per unit of risk. Grand Korea Leisure is currently generating about -0.04 per unit of risk. If you would invest  5,130,000  in Doosan Bobcat on September 26, 2024 and sell it today you would lose (495,000) from holding Doosan Bobcat or give up 9.65% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Doosan Bobcat  vs.  Grand Korea Leisure

Doosan Bobcat

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Doosan Bobcat are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Doosan Bobcat may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Grand Korea Leisure

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grand Korea Leisure has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Grand Korea is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Doosan Bobcat and Grand Korea

The main advantage of trading using opposite Doosan Bobcat and Grand Korea positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Doosan Bobcat position performs unexpectedly, Grand Korea 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 Grand Korea will offset losses from the drop in Grand Korea's long position.

The idea behind Doosan Bobcat and Grand Korea Leisure pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.