Correlation Between ASTORY CoLtd and Doosan Heavy

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

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

Diversification Opportunities for ASTORY CoLtd and Doosan Heavy

-0.61

Correlation Coefficient

ASTORY CoLtd  Doosan Heavy

Excellent diversification

The 3 months correlation between ASTORY and Doosan is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding ASTORY CoLtd 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 ASTORY CoLtd 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 ASTORY CoLtd 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 ASTORY CoLtd i.e., ASTORY CoLtd and Doosan Heavy go up and down completely randomly.

Pair Corralation between ASTORY CoLtd and Doosan Heavy

Assuming the 90 days trading horizon ASTORY CoLtd is expected to under-perform the Doosan Heavy. But the stock apears to be less risky and, when comparing its historical volatility, ASTORY CoLtd is 1.01 times less risky than Doosan Heavy. The stock trades about -0.09 of its potential returns per unit of risk. The Doosan Heavy Ind is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,572,000  in Doosan Heavy Ind on October 3, 2024 and sell it today you would earn a total of  183,000  from holding Doosan Heavy Ind or generate 11.64% return on investment over 90 days.

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

ASTORY CoLtd  vs.  Doosan Heavy Ind

ASTORY CoLtd

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ASTORY CoLtd are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, ASTORY CoLtd may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Doosan Heavy Ind

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Doosan Heavy Ind are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Doosan Heavy is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with ASTORY CoLtd and Doosan Heavy

The main advantage of trading using opposite ASTORY CoLtd and Doosan Heavy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ASTORY CoLtd 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 ASTORY CoLtd 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.