Correlation Between Doosan Bobcat and UNISEM

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

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

Diversification Opportunities for Doosan Bobcat and UNISEM

-0.13

Correlation Coefficient

Doosan Bobcat  UNISEM

Good diversification

The 3 months correlation between Doosan and UNISEM is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Doosan Bobcat and UNISEM Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UNISEM and Doosan Bobcat 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 Doosan Bobcat are associated (or correlated) with UNISEM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UNISEM has no effect on the direction of Doosan Bobcat i.e., Doosan Bobcat and UNISEM go up and down completely randomly.

Pair Corralation between Doosan Bobcat and UNISEM

Assuming the 90 days trading horizon Doosan Bobcat is expected to generate 1.02 times more return on investment than UNISEM. However, Doosan Bobcat is 1.02 times more volatile than UNISEM Co. It trades about 0.38 of its potential returns per unit of risk. UNISEM Co is currently generating about -0.01 per unit of risk. If you would invest  3,710,000  in Doosan Bobcat on September 23, 2024 and sell it today you would earn a total of  1,010,000  from holding Doosan Bobcat or generate 27.22% return on investment over 90 days.

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

Doosan Bobcat  vs.  UNISEM Co

Doosan Bobcat

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Doosan Bobcat are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Doosan Bobcat sustained solid returns over the last few months and may actually be approaching a breakup point.

UNISEM

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UNISEM Co 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.

Pair Trading with Doosan Bobcat and UNISEM

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

The idea behind Doosan Bobcat and UNISEM 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.

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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.