Correlation Between SIMMTECH and Doosan Pref

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

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

Diversification Opportunities for SIMMTECH and Doosan Pref

0.67

Correlation Coefficient

SIMMTECH  Doosan Pref

Poor diversification

The 3 months correlation between SIMMTECH and Doosan is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding SIMMTECH Co and Doosan Pref Shs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Doosan Pref Shs and SIMMTECH 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 SIMMTECH Co are associated (or correlated) with Doosan Pref. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Doosan Pref Shs has no effect on the direction of SIMMTECH i.e., SIMMTECH and Doosan Pref go up and down completely randomly.

Pair Corralation between SIMMTECH and Doosan Pref

Assuming the 90 days trading horizon SIMMTECH Co is expected to generate 1.47 times more return on investment than Doosan Pref. However, SIMMTECH is 1.47 times more volatile than Doosan Pref Shs. It trades about 0.23 of its potential returns per unit of risk. Doosan Pref Shs is currently generating about 0.14 per unit of risk. If you would invest  1,101,000  in SIMMTECH Co on December 26, 2024 and sell it today you would earn a total of  1,044,000  from holding SIMMTECH Co or generate 94.82% return on investment over 90 days.

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

SIMMTECH Co  vs.  Doosan Pref Shs

SIMMTECH

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in SIMMTECH Co are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, SIMMTECH sustained solid returns over the last few months and may actually be approaching a breakup point.

Doosan Pref Shs

Risk-Adjusted Performance

Good

Over the last 90 days Doosan Pref Shs has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat weak basic indicators, Doosan Pref sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SIMMTECH and Doosan Pref

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

The idea behind SIMMTECH Co and Doosan Pref Shs 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.