Correlation Between PNC Technologies and Doosan Heavy

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

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

Diversification Opportunities for PNC Technologies and Doosan Heavy

-0.26

Correlation Coefficient

PNC Technologies  Doosan Heavy

Very good diversification

The 3 months correlation between PNC and Doosan is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding PNC Technologies co and Doosan Heavy Ind in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Doosan Heavy Ind and PNC Technologies 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 PNC Technologies co are associated (or correlated) with Doosan Heavy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Doosan Heavy Ind has no effect on the direction of PNC Technologies i.e., PNC Technologies and Doosan Heavy go up and down completely randomly.

Pair Corralation between PNC Technologies and Doosan Heavy

Assuming the 90 days trading horizon PNC Technologies co is expected to under-perform the Doosan Heavy. But the stock apears to be less risky and, when comparing its historical volatility, PNC Technologies co is 2.36 times less risky than Doosan Heavy. The stock trades about -0.03 of its potential returns per unit of risk. The Doosan Heavy Ind is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  1,816,000  in Doosan Heavy Ind on December 22, 2024 and sell it today you would earn a total of  884,000  from holding Doosan Heavy Ind or generate 48.68% return on investment over 90 days.

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

PNC Technologies co  vs.  Doosan Heavy Ind

PNC Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days PNC Technologies co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, PNC Technologies is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Doosan Heavy Ind

Risk-Adjusted Performance

Solid

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

Pair Trading with PNC Technologies and Doosan Heavy

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

The idea behind PNC Technologies co and Doosan Heavy Ind 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.