Correlation Between Samyoung Electronics and Samyang Foods
Can any of the company-specific risk be diversified away by investing in both Samyoung Electronics and Samyang Foods 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 Samyoung Electronics and Samyang Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Samyoung Electronics Co and Samyang Foods Co, you can compare the effects of market volatilities on Samyoung Electronics and Samyang Foods 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 Samyoung Electronics with a short position of Samyang Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samyoung Electronics and Samyang Foods.
Diversification Opportunities for Samyoung Electronics and Samyang Foods
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Samyoung and Samyang is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Samyoung Electronics Co and Samyang Foods Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samyang Foods and Samyoung Electronics 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 Samyoung Electronics Co are associated (or correlated) with Samyang Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samyang Foods has no effect on the direction of Samyoung Electronics i.e., Samyoung Electronics and Samyang Foods go up and down completely randomly.
Pair Corralation between Samyoung Electronics and Samyang Foods
Assuming the 90 days trading horizon Samyoung Electronics Co is expected to generate 0.38 times more return on investment than Samyang Foods. However, Samyoung Electronics Co is 2.66 times less risky than Samyang Foods. It trades about 0.21 of its potential returns per unit of risk. Samyang Foods Co is currently generating about 0.01 per unit of risk. If you would invest 960,000 in Samyoung Electronics Co on August 28, 2024 and sell it today you would earn a total of 59,000 from holding Samyoung Electronics Co or generate 6.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samyoung Electronics Co vs. Samyang Foods Co
Performance |
| Timeline |
| Samyoung Electronics |
| Samyang Foods |
Samyoung Electronics and Samyang Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samyoung Electronics and Samyang Foods
The main advantage of trading using opposite Samyoung Electronics and Samyang Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samyoung Electronics position performs unexpectedly, Samyang Foods 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 Samyang Foods will offset losses from the drop in Samyang Foods' long position.The idea behind Samyoung Electronics Co and Samyang Foods Co 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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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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