Correlation Between I Components and Doosan Fuel

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

By analyzing existing cross correlation between i Components Co and Doosan Fuel Cell, you can compare the effects of market volatilities on I Components and Doosan Fuel 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 I Components with a short position of Doosan Fuel. Check out your portfolio center. Please also check ongoing floating volatility patterns of I Components and Doosan Fuel.

Diversification Opportunities for I Components and Doosan Fuel

0.38

Correlation Coefficient

I Components  Doosan Fuel

Weak diversification

The 3 months correlation between 059100 and Doosan is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding i Components Co and Doosan Fuel Cell in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Doosan Fuel Cell and I Components 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 i Components Co are associated (or correlated) with Doosan Fuel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Doosan Fuel Cell has no effect on the direction of I Components i.e., I Components and Doosan Fuel go up and down completely randomly.

Pair Corralation between I Components and Doosan Fuel

Assuming the 90 days trading horizon i Components Co is expected to generate 1.0 times more return on investment than Doosan Fuel. However, i Components Co is 1.0 times less risky than Doosan Fuel. It trades about -0.02 of its potential returns per unit of risk. Doosan Fuel Cell is currently generating about -0.04 per unit of risk. If you would invest  777,000  in i Components Co on October 4, 2024 and sell it today you would lose (288,000) from holding i Components Co or give up 37.07% of portfolio value over 90 days.

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

i Components Co  vs.  Doosan Fuel Cell

i Components

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in i Components Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, I Components is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Doosan Fuel Cell

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Doosan Fuel Cell has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with I Components and Doosan Fuel

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

The idea behind i Components Co and Doosan Fuel Cell 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.

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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.