Correlation Between Samlip General and Doosan Heavy

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

By analyzing existing cross correlation between Samlip General Foods and Doosan Heavy Ind, you can compare the effects of market volatilities on Samlip General and Doosan Heavy 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 Samlip General with a short position of Doosan Heavy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samlip General and Doosan Heavy.

Diversification Opportunities for Samlip General and Doosan Heavy

-0.46

Correlation Coefficient

Samlip General  Doosan Heavy

Very good diversification

The 3 months correlation between Samlip and Doosan is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Samlip General Foods and Doosan Heavy Ind in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Doosan Heavy Ind and Samlip General 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 Samlip General Foods are associated (or correlated) with Doosan Heavy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Doosan Heavy Ind has no effect on the direction of Samlip General i.e., Samlip General and Doosan Heavy go up and down completely randomly.

Pair Corralation between Samlip General and Doosan Heavy

Assuming the 90 days trading horizon Samlip General Foods is expected to under-perform the Doosan Heavy. But the stock apears to be less risky and, when comparing its historical volatility, Samlip General Foods is 1.97 times less risky than Doosan Heavy. The stock trades about -0.04 of its potential returns per unit of risk. The Doosan Heavy Ind is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,715,000  in Doosan Heavy Ind on October 4, 2024 and sell it today you would earn a total of  40,000  from holding Doosan Heavy Ind or generate 2.33% return on investment over 90 days.

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

Samlip General Foods  vs.  Doosan Heavy Ind

Samlip General Foods

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Samlip General Foods are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Samlip General is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Doosan Heavy Ind

Risk-Adjusted Performance

1 of 100

Weak

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

Pair Trading with Samlip General and Doosan Heavy

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

The idea behind Samlip General Foods and Doosan Heavy Ind 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.