Correlation Between Samick Musical and Daehan Synthetic
Can any of the company-specific risk be diversified away by investing in both Samick Musical and Daehan Synthetic 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 Samick Musical and Daehan Synthetic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Samick Musical Instruments and Daehan Synthetic Fiber, you can compare the effects of market volatilities on Samick Musical and Daehan Synthetic 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 Samick Musical with a short position of Daehan Synthetic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samick Musical and Daehan Synthetic.
Diversification Opportunities for Samick Musical and Daehan Synthetic
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Samick and Daehan is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Samick Musical Instruments and Daehan Synthetic Fiber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daehan Synthetic Fiber and Samick Musical 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 Samick Musical Instruments are associated (or correlated) with Daehan Synthetic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daehan Synthetic Fiber has no effect on the direction of Samick Musical i.e., Samick Musical and Daehan Synthetic go up and down completely randomly.
Pair Corralation between Samick Musical and Daehan Synthetic
Assuming the 90 days trading horizon Samick Musical Instruments is expected to generate 0.72 times more return on investment than Daehan Synthetic. However, Samick Musical Instruments is 1.39 times less risky than Daehan Synthetic. It trades about 0.26 of its potential returns per unit of risk. Daehan Synthetic Fiber is currently generating about -0.08 per unit of risk. If you would invest 107,800 in Samick Musical Instruments on September 4, 2024 and sell it today you would earn a total of 3,000 from holding Samick Musical Instruments or generate 2.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samick Musical Instruments vs. Daehan Synthetic Fiber
Performance |
| Timeline |
| Samick Musical Instr |
| Daehan Synthetic Fiber |
Samick Musical and Daehan Synthetic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samick Musical and Daehan Synthetic
The main advantage of trading using opposite Samick Musical and Daehan Synthetic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samick Musical position performs unexpectedly, Daehan Synthetic 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 Daehan Synthetic will offset losses from the drop in Daehan Synthetic's long position.| Samick Musical vs. Pureun Mutual Savings | Samick Musical vs. Korea Shipbuilding Offshore | Samick Musical vs. Kukdong Oil Chemicals | Samick Musical vs. Sung Bo Chemicals |
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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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