Correlation Between Damsan JSC and Fecon Mining

Can any of the company-specific risk be diversified away by investing in both Damsan JSC and Fecon Mining 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 Damsan JSC and Fecon Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Damsan JSC and Fecon Mining JSC, you can compare the effects of market volatilities on Damsan JSC and Fecon Mining 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 Damsan JSC with a short position of Fecon Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Damsan JSC and Fecon Mining.

Diversification Opportunities for Damsan JSC and Fecon Mining

0.82

Correlation Coefficient

Damsan JSC  Fecon Mining

Very poor diversification

The 3 months correlation between Damsan and Fecon is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Damsan JSC and Fecon Mining JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fecon Mining JSC and Damsan JSC 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 Damsan JSC are associated (or correlated) with Fecon Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fecon Mining JSC has no effect on the direction of Damsan JSC i.e., Damsan JSC and Fecon Mining go up and down completely randomly.

Pair Corralation between Damsan JSC and Fecon Mining

Assuming the 90 days trading horizon Damsan JSC is expected to generate 0.44 times more return on investment than Fecon Mining. However, Damsan JSC is 2.28 times less risky than Fecon Mining. It trades about 0.1 of its potential returns per unit of risk. Fecon Mining JSC is currently generating about 0.03 per unit of risk. If you would invest  881,000  in Damsan JSC on December 30, 2024 and sell it today you would earn a total of  78,000  from holding Damsan JSC or generate 8.85% return on investment over 90 days.

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

Damsan JSC  vs.  Fecon Mining JSC

Damsan JSC

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Damsan JSC are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Damsan JSC may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Fecon Mining JSC

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fecon Mining JSC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, Fecon Mining may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Damsan JSC and Fecon Mining

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

The idea behind Damsan JSC and Fecon Mining JSC 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.