Correlation Between Cheryong Industrial and Doosan Robotics

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

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

Diversification Opportunities for Cheryong Industrial and Doosan Robotics

0.3

Correlation Coefficient

Cheryong Industrial  Doosan Robotics

Weak diversification

The 3 months correlation between Cheryong and Doosan is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Cheryong Industrial CoLtd and Doosan Robotics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Doosan Robotics and Cheryong 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 Cheryong Industrial CoLtd are associated (or correlated) with Doosan Robotics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Doosan Robotics has no effect on the direction of Cheryong Industrial i.e., Cheryong Industrial and Doosan Robotics go up and down completely randomly.

Pair Corralation between Cheryong Industrial and Doosan Robotics

Assuming the 90 days trading horizon Cheryong Industrial CoLtd is expected to generate 0.41 times more return on investment than Doosan Robotics. However, Cheryong Industrial CoLtd is 2.47 times less risky than Doosan Robotics. It trades about 0.5 of its potential returns per unit of risk. Doosan Robotics is currently generating about 0.13 per unit of risk. If you would invest  438,664  in Cheryong Industrial CoLtd on October 9, 2024 and sell it today you would earn a total of  134,336  from holding Cheryong Industrial CoLtd or generate 30.62% return on investment over 90 days.

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

Cheryong Industrial CoLtd  vs.  Doosan Robotics

Cheryong Industrial CoLtd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cheryong Industrial CoLtd 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.

Doosan Robotics

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Doosan Robotics are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Doosan Robotics may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Cheryong Industrial and Doosan Robotics

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

The idea behind Cheryong Industrial CoLtd and Doosan Robotics 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.