Correlation Between Doosan Fuel and LF Co
Can any of the company-specific risk be diversified away by investing in both Doosan Fuel and LF Co 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 LF Co 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 LF Co, you can compare the effects of market volatilities on Doosan Fuel and LF Co 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 LF Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of Doosan Fuel and LF Co.
Diversification Opportunities for Doosan Fuel and LF Co
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Doosan and 066970 is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Doosan Fuel Cell and LF Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LF Co 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 LF Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LF Co has no effect on the direction of Doosan Fuel i.e., Doosan Fuel and LF Co go up and down completely randomly.
Pair Corralation between Doosan Fuel and LF Co
Assuming the 90 days trading horizon Doosan Fuel Cell is expected to under-perform the LF Co. But the stock apears to be less risky and, when comparing its historical volatility, Doosan Fuel Cell is 1.49 times less risky than LF Co. The stock trades about -0.03 of its potential returns per unit of risk. The LF Co is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 17,680,400 in LF Co on September 26, 2024 and sell it today you would lose (8,830,400) from holding LF Co or give up 49.94% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Doosan Fuel Cell vs. LF Co
Performance |
Timeline |
Doosan Fuel Cell |
LF Co |
Doosan Fuel and LF Co Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Doosan Fuel and LF Co
The main advantage of trading using opposite Doosan Fuel and LF Co positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Doosan Fuel position performs unexpectedly, LF Co 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 LF Co will offset losses from the drop in LF Co's long position.Doosan Fuel vs. LS Electric | Doosan Fuel vs. Korea Ratings Co | Doosan Fuel vs. Humasis Co | Doosan Fuel vs. Korea Investment Holdings |
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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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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