Correlation Between Daesung Industrial and Doosan

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

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

Diversification Opportunities for Daesung Industrial and Doosan

-0.08

Correlation Coefficient

Daesung Industrial  Doosan

Good diversification

The 3 months correlation between Daesung and Doosan is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Daesung Industrial Co and Doosan Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Doosan and Daesung Industrial 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 Daesung Industrial Co are associated (or correlated) with Doosan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Doosan has no effect on the direction of Daesung Industrial i.e., Daesung Industrial and Doosan go up and down completely randomly.

Pair Corralation between Daesung Industrial and Doosan

Assuming the 90 days trading horizon Daesung Industrial is expected to generate 4.03 times less return on investment than Doosan. But when comparing it to its historical volatility, Daesung Industrial Co is 2.04 times less risky than Doosan. It trades about 0.07 of its potential returns per unit of risk. Doosan Co is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  10,490,000  in Doosan Co on December 25, 2024 and sell it today you would earn a total of  2,970,000  from holding Doosan Co or generate 28.31% return on investment over 90 days.

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

Daesung Industrial Co  vs.  Doosan Co

Daesung Industrial

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Daesung Industrial Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Daesung Industrial may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Doosan

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Doosan Co are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Doosan sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Daesung Industrial and Doosan

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

The idea behind Daesung Industrial Co and Doosan Co 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.