Correlation Between Doosan Fuel and EO Technics

Can any of the company-specific risk be diversified away by investing in both Doosan Fuel and EO Technics 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 EO Technics 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 EO Technics Co, you can compare the effects of market volatilities on Doosan Fuel and EO Technics 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 EO Technics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Doosan Fuel and EO Technics.

Diversification Opportunities for Doosan Fuel and EO Technics

0.46

Correlation Coefficient

Doosan Fuel  EO Technics

Very weak diversification

The 3 months correlation between Doosan and 039030 is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Doosan Fuel Cell and EO Technics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EO Technics 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 EO Technics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EO Technics has no effect on the direction of Doosan Fuel i.e., Doosan Fuel and EO Technics go up and down completely randomly.

Pair Corralation between Doosan Fuel and EO Technics

Assuming the 90 days trading horizon Doosan Fuel Cell is expected to under-perform the EO Technics. But the stock apears to be less risky and, when comparing its historical volatility, Doosan Fuel Cell is 1.73 times less risky than EO Technics. The stock trades about -0.04 of its potential returns per unit of risk. The EO Technics Co is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  13,920,000  in EO Technics Co on December 29, 2024 and sell it today you would earn a total of  180,000  from holding EO Technics Co or generate 1.29% return on investment over 90 days.

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

Doosan Fuel Cell  vs.  EO Technics Co

Doosan Fuel Cell

Risk-Adjusted Performance

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.

EO Technics

Risk-Adjusted Performance

Weak

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

Pair Trading with Doosan Fuel and EO Technics

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

The idea behind Doosan Fuel Cell and EO Technics 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.