Correlation Between Worldex Industry and Doosan Bobcat

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

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

Diversification Opportunities for Worldex Industry and Doosan Bobcat

0.53

Correlation Coefficient

Worldex Industry  Doosan Bobcat

Very weak diversification

The 3 months correlation between Worldex and Doosan is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Worldex Industry Trading and Doosan Bobcat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Doosan Bobcat and Worldex Industry 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 Worldex Industry Trading 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 Worldex Industry i.e., Worldex Industry and Doosan Bobcat go up and down completely randomly.

Pair Corralation between Worldex Industry and Doosan Bobcat

Assuming the 90 days trading horizon Worldex Industry Trading is expected to generate 0.97 times more return on investment than Doosan Bobcat. However, Worldex Industry Trading is 1.03 times less risky than Doosan Bobcat. It trades about 0.15 of its potential returns per unit of risk. Doosan Bobcat is currently generating about 0.09 per unit of risk. If you would invest  1,639,000  in Worldex Industry Trading on December 25, 2024 and sell it today you would earn a total of  386,000  from holding Worldex Industry Trading or generate 23.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.25%
Values	Daily Returns

Worldex Industry Trading  vs.  Doosan Bobcat

Worldex Industry Trading

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Worldex Industry Trading are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Worldex Industry sustained solid returns over the last few months and may actually be approaching a breakup point.

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 Worldex Industry and Doosan Bobcat

The main advantage of trading using opposite Worldex Industry and Doosan Bobcat positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Worldex Industry 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 Worldex Industry Trading 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.