Correlation Between Samyang Foods and Oriental Precision
Can any of the company-specific risk be diversified away by investing in both Samyang Foods and Oriental Precision 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 Samyang Foods and Oriental Precision into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Samyang Foods Co and Oriental Precision Engineering, you can compare the effects of market volatilities on Samyang Foods and Oriental Precision 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 Samyang Foods with a short position of Oriental Precision. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samyang Foods and Oriental Precision.
Diversification Opportunities for Samyang Foods and Oriental Precision
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Samyang and Oriental is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Samyang Foods Co and Oriental Precision Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oriental Precision and Samyang Foods 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 Samyang Foods Co are associated (or correlated) with Oriental Precision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oriental Precision has no effect on the direction of Samyang Foods i.e., Samyang Foods and Oriental Precision go up and down completely randomly.
Pair Corralation between Samyang Foods and Oriental Precision
Assuming the 90 days trading horizon Samyang Foods Co is expected to under-perform the Oriental Precision. But the stock apears to be less risky and, when comparing its historical volatility, Samyang Foods Co is 1.46 times less risky than Oriental Precision. The stock trades about -0.16 of its potential returns per unit of risk. The Oriental Precision Engineering is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 534,000 in Oriental Precision Engineering on October 28, 2024 and sell it today you would earn a total of 39,000 from holding Oriental Precision Engineering or generate 7.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samyang Foods Co vs. Oriental Precision Engineering
Performance |
| Timeline |
| Samyang Foods |
| Oriental Precision |
Samyang Foods and Oriental Precision Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samyang Foods and Oriental Precision
The main advantage of trading using opposite Samyang Foods and Oriental Precision positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samyang Foods position performs unexpectedly, Oriental Precision 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 Oriental Precision will offset losses from the drop in Oriental Precision's long position.| Samyang Foods vs. KB Financial Group | Samyang Foods vs. Shinhan Financial Group | Samyang Foods vs. Hana Financial | Samyang Foods vs. Woori Financial Group |
| Oriental Precision vs. Korea Industrial Co | Oriental Precision vs. Youngchang Chemical Co | Oriental Precision vs. Youngbo Chemical Co | Oriental Precision vs. Tae Kyung Chemical |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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