Correlation Between V One and Doosan Engine

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

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

Diversification Opportunities for V One and Doosan Engine

-0.2

Correlation Coefficient

V One  Doosan Engine

Good diversification

The 3 months correlation between 251630 and Doosan is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding V One Tech Co and Doosan Engine Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Doosan Engine and V One 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 V One Tech Co are associated (or correlated) with Doosan Engine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Doosan Engine has no effect on the direction of V One i.e., V One and Doosan Engine go up and down completely randomly.

Pair Corralation between V One and Doosan Engine

Assuming the 90 days trading horizon V One Tech Co is expected to generate 1.06 times more return on investment than Doosan Engine. However, V One is 1.06 times more volatile than Doosan Engine Co. It trades about 0.54 of its potential returns per unit of risk. Doosan Engine Co is currently generating about 0.54 per unit of risk. If you would invest  337,048  in V One Tech Co on October 9, 2024 and sell it today you would earn a total of  127,952  from holding V One Tech Co or generate 37.96% return on investment over 90 days.

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

V One Tech Co  vs.  Doosan Engine Co

V One Tech

Risk-Adjusted Performance

0 of 100

Very Weak

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

Doosan Engine

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Doosan Engine Co are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Doosan Engine sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with V One and Doosan Engine

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

The idea behind V One Tech Co and Doosan Engine 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.

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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.