Correlation Between Doosan Fuel and SS TECH

Can any of the company-specific risk be diversified away by investing in both Doosan Fuel and SS TECH 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 SS TECH 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 SS TECH, you can compare the effects of market volatilities on Doosan Fuel and SS TECH 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 SS TECH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Doosan Fuel and SS TECH.

Diversification Opportunities for Doosan Fuel and SS TECH

0.83

Correlation Coefficient

Doosan Fuel  SS TECH

Very poor diversification

The 3 months correlation between Doosan and 101490 is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Doosan Fuel Cell and SS TECH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SS TECH 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 SS TECH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SS TECH has no effect on the direction of Doosan Fuel i.e., Doosan Fuel and SS TECH go up and down completely randomly.

Pair Corralation between Doosan Fuel and SS TECH

Assuming the 90 days trading horizon Doosan Fuel Cell is expected to generate 1.19 times more return on investment than SS TECH. However, Doosan Fuel is 1.19 times more volatile than SS TECH. It trades about 0.02 of its potential returns per unit of risk. SS TECH is currently generating about -0.07 per unit of risk. If you would invest  1,844,000  in Doosan Fuel Cell on August 31, 2024 and sell it today you would earn a total of  2,000  from holding Doosan Fuel Cell or generate 0.11% return on investment over 90 days.

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

Doosan Fuel Cell  vs.  SS TECH

Doosan Fuel Cell

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Doosan Fuel Cell are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Doosan Fuel is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

SS TECH

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SS TECH has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Doosan Fuel and SS TECH

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

The idea behind Doosan Fuel Cell and SS TECH 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.

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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.