Correlation Between Jeju Beer and Doosan Robotics

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

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

Diversification Opportunities for Jeju Beer and Doosan Robotics

-0.3

Correlation Coefficient

Jeju Beer  Doosan Robotics

Very good diversification

The 3 months correlation between Jeju and Doosan is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Jeju Beer Co and Doosan Robotics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Doosan Robotics and Jeju Beer 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 Jeju Beer Co are associated (or correlated) with Doosan Robotics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Doosan Robotics has no effect on the direction of Jeju Beer i.e., Jeju Beer and Doosan Robotics go up and down completely randomly.

Pair Corralation between Jeju Beer and Doosan Robotics

Assuming the 90 days trading horizon Jeju Beer Co is expected to under-perform the Doosan Robotics. But the stock apears to be less risky and, when comparing its historical volatility, Jeju Beer Co is 1.5 times less risky than Doosan Robotics. The stock trades about -0.15 of its potential returns per unit of risk. The Doosan Robotics is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  5,140,000  in Doosan Robotics on December 24, 2024 and sell it today you would earn a total of  490,000  from holding Doosan Robotics or generate 9.53% return on investment over 90 days.

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

Jeju Beer Co  vs.  Doosan Robotics

Jeju Beer

Risk-Adjusted Performance

Very Weak

Over the last 90 days Jeju Beer Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Doosan Robotics

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Doosan Robotics are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Doosan Robotics sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Jeju Beer and Doosan Robotics

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

The idea behind Jeju Beer Co and Doosan Robotics 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.