Correlation Between Doosan Fuel and Seoul Broadcasting

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

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

Diversification Opportunities for Doosan Fuel and Seoul Broadcasting

0.0

Correlation Coefficient

Doosan Fuel  Seoul Broadcasting

Pay attention - limited upside

The 3 months correlation between Doosan and Seoul is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Doosan Fuel Cell and Seoul Broadcasting System in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seoul Broadcasting System and Doosan Fuel 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 Fuel Cell are associated (or correlated) with Seoul Broadcasting. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seoul Broadcasting System has no effect on the direction of Doosan Fuel i.e., Doosan Fuel and Seoul Broadcasting go up and down completely randomly.

Pair Corralation between Doosan Fuel and Seoul Broadcasting

If you would invest  1,583,000  in Seoul Broadcasting System on October 4, 2024 and sell it today you would earn a total of  662,000  from holding Seoul Broadcasting System or generate 41.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Doosan Fuel Cell  vs.  Seoul Broadcasting System

Doosan Fuel Cell

Risk-Adjusted Performance

0 of 100

Very Weak

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

Seoul Broadcasting System

Risk-Adjusted Performance

9 of 100

OK

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

Pair Trading with Doosan Fuel and Seoul Broadcasting

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

The idea behind Doosan Fuel Cell and Seoul Broadcasting System 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.