Correlation Between Doosan Fuel and SGA Solutions

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

Diversification Opportunities for Doosan Fuel and SGA Solutions

0.24

Correlation Coefficient

Doosan Fuel  SGA Solutions

Modest diversification

The 3 months correlation between Doosan and SGA is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Doosan Fuel Cell and SGA Solutions CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SGA Solutions CoLtd 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 SGA Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SGA Solutions CoLtd has no effect on the direction of Doosan Fuel i.e., Doosan Fuel and SGA Solutions go up and down completely randomly.

Pair Corralation between Doosan Fuel and SGA Solutions

Assuming the 90 days trading horizon Doosan Fuel Cell is expected to under-perform the SGA Solutions. But the stock apears to be less risky and, when comparing its historical volatility, Doosan Fuel Cell is 1.01 times less risky than SGA Solutions. The stock trades about -0.07 of its potential returns per unit of risk. The SGA Solutions CoLtd is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  46,952  in SGA Solutions CoLtd on September 28, 2024 and sell it today you would lose (1,552) from holding SGA Solutions CoLtd or give up 3.31% of portfolio value over 90 days.

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

Doosan Fuel Cell  vs.  SGA Solutions CoLtd

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 weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

SGA Solutions CoLtd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SGA Solutions CoLtd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, SGA Solutions 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 SGA Solutions

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

The idea behind Doosan Fuel Cell and SGA Solutions CoLtd 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 Commodity Directory module to find actively traded commodities issued by global exchanges.