Correlation Between Sam Chun and Hyosung Advanced
Can any of the company-specific risk be diversified away by investing in both Sam Chun and Hyosung Advanced 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 Sam Chun and Hyosung Advanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sam Chun Dang and Hyosung Advanced Materials, you can compare the effects of market volatilities on Sam Chun and Hyosung Advanced 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 Sam Chun with a short position of Hyosung Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sam Chun and Hyosung Advanced.
Diversification Opportunities for Sam Chun and Hyosung Advanced
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Sam and Hyosung is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Sam Chun Dang and Hyosung Advanced Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hyosung Advanced Mat and Sam Chun 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 Sam Chun Dang are associated (or correlated) with Hyosung Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hyosung Advanced Mat has no effect on the direction of Sam Chun i.e., Sam Chun and Hyosung Advanced go up and down completely randomly.
Pair Corralation between Sam Chun and Hyosung Advanced
Assuming the 90 days trading horizon Sam Chun Dang is expected to generate 2.03 times more return on investment than Hyosung Advanced. However, Sam Chun is 2.03 times more volatile than Hyosung Advanced Materials. It trades about 0.06 of its potential returns per unit of risk. Hyosung Advanced Materials is currently generating about -0.09 per unit of risk. If you would invest 5,820,000 in Sam Chun Dang on September 12, 2024 and sell it today you would earn a total of 3,980,000 from holding Sam Chun Dang or generate 68.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sam Chun Dang vs. Hyosung Advanced Materials
Performance |
| Timeline |
| Sam Chun Dang |
| Hyosung Advanced Mat |
Sam Chun and Hyosung Advanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sam Chun and Hyosung Advanced
The main advantage of trading using opposite Sam Chun and Hyosung Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sam Chun position performs unexpectedly, Hyosung Advanced 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 Hyosung Advanced will offset losses from the drop in Hyosung Advanced's long position.The idea behind Sam Chun Dang and Hyosung Advanced Materials 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.| Hyosung Advanced vs. Solution Advanced Technology | Hyosung Advanced vs. Busan Industrial Co | Hyosung Advanced vs. Busan Ind | Hyosung Advanced vs. Sam Chun Dang |
Check out your portfolio center.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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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