Correlation Between Haitai Confectionery and Doosan Fuel

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

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

Diversification Opportunities for Haitai Confectionery and Doosan Fuel

0.25

Correlation Coefficient

Haitai Confectionery  Doosan Fuel

Modest diversification

The 3 months correlation between Haitai and Doosan is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Haitai Confectionery Foods 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 Haitai Confectionery 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 Haitai Confectionery Foods 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 Haitai Confectionery i.e., Haitai Confectionery and Doosan Fuel go up and down completely randomly.

Pair Corralation between Haitai Confectionery and Doosan Fuel

Assuming the 90 days trading horizon Haitai Confectionery Foods is expected to under-perform the Doosan Fuel. But the stock apears to be less risky and, when comparing its historical volatility, Haitai Confectionery Foods is 1.63 times less risky than Doosan Fuel. The stock trades about -0.2 of its potential returns per unit of risk. The Doosan Fuel Cell is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,679,000  in Doosan Fuel Cell on October 22, 2024 and sell it today you would earn a total of  49,000  from holding Doosan Fuel Cell or generate 2.92% return on investment over 90 days.

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

Haitai Confectionery Foods  vs.  Doosan Fuel Cell

Haitai Confectionery

Risk-Adjusted Performance

6 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Haitai Confectionery Foods are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Haitai Confectionery may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Doosan Fuel Cell

Risk-Adjusted Performance

1 of 100

Very Weak

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

Pair Trading with Haitai Confectionery and Doosan Fuel

The main advantage of trading using opposite Haitai Confectionery and Doosan Fuel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Haitai Confectionery 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 Haitai Confectionery Foods 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.

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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.