Correlation Between Doosan Heavy and Samlip General

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

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

Diversification Opportunities for Doosan Heavy and Samlip General

-0.46

Correlation Coefficient

Doosan Heavy  Samlip General

Very good diversification

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

Pair Corralation between Doosan Heavy and Samlip General

Assuming the 90 days trading horizon Doosan Heavy Ind is expected to generate 1.97 times more return on investment than Samlip General. However, Doosan Heavy is 1.97 times more volatile than Samlip General Foods. It trades about 0.01 of its potential returns per unit of risk. Samlip General Foods is currently generating about -0.04 per unit of risk. 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

Doosan Heavy Ind  vs.  Samlip General Foods

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.

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.

Pair Trading with Doosan Heavy and Samlip General

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

The idea behind Doosan Heavy Ind and Samlip General Foods 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.