Correlation Between Sangsangin Investment and Doosan Bobcat

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

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

Diversification Opportunities for Sangsangin Investment and Doosan Bobcat

-0.52

Correlation Coefficient

Sangsangin Investment  Doosan Bobcat

Excellent diversification

The 3 months correlation between Sangsangin and Doosan is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Sangsangin Investment Securiti and Doosan Bobcat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Doosan Bobcat and Sangsangin Investment 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 Sangsangin Investment Securities are associated (or correlated) with Doosan Bobcat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Doosan Bobcat has no effect on the direction of Sangsangin Investment i.e., Sangsangin Investment and Doosan Bobcat go up and down completely randomly.

Pair Corralation between Sangsangin Investment and Doosan Bobcat

Assuming the 90 days trading horizon Sangsangin Investment is expected to generate 57.61 times less return on investment than Doosan Bobcat. But when comparing it to its historical volatility, Sangsangin Investment Securities is 2.93 times less risky than Doosan Bobcat. It trades about 0.0 of its potential returns per unit of risk. Doosan Bobcat is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  4,360,000  in Doosan Bobcat on December 27, 2024 and sell it today you would earn a total of  570,000  from holding Doosan Bobcat or generate 13.07% return on investment over 90 days.

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

Sangsangin Investment Securiti  vs.  Doosan Bobcat

Sangsangin Investment

Risk-Adjusted Performance

Very Weak

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

Doosan Bobcat

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Doosan Bobcat are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Doosan Bobcat sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sangsangin Investment and Doosan Bobcat

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

The idea behind Sangsangin Investment Securities and Doosan Bobcat 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 Global Correlations module to find global opportunities by holding instruments from different markets.