Correlation Between Doosan Fuel and HyVision System

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

Diversification Opportunities for Doosan Fuel and HyVision System

0.63

Correlation Coefficient

Doosan Fuel  HyVision System

Poor diversification

The 3 months correlation between Doosan and HyVision is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Doosan Fuel Cell and HyVision System in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HyVision 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 HyVision System. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HyVision System has no effect on the direction of Doosan Fuel i.e., Doosan Fuel and HyVision System go up and down completely randomly.

Pair Corralation between Doosan Fuel and HyVision System

Assuming the 90 days trading horizon Doosan Fuel Cell is expected to under-perform the HyVision System. But the stock apears to be less risky and, when comparing its historical volatility, Doosan Fuel Cell is 1.11 times less risky than HyVision System. The stock trades about -0.02 of its potential returns per unit of risk. The HyVision System is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  2,022,201  in HyVision System on September 23, 2024 and sell it today you would lose (287,201) from holding HyVision System or give up 14.2% of portfolio value over 90 days.

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

Doosan Fuel Cell  vs.  HyVision 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.

HyVision System

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in HyVision System are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, HyVision System 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 HyVision System

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

The idea behind Doosan Fuel Cell and HyVision 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.