Correlation Between Samsung SDI and Namyang Dairy
Can any of the company-specific risk be diversified away by investing in both Samsung SDI and Namyang Dairy 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 Samsung SDI and Namyang Dairy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Samsung SDI and Namyang Dairy Products, you can compare the effects of market volatilities on Samsung SDI and Namyang Dairy 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 Samsung SDI with a short position of Namyang Dairy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung SDI and Namyang Dairy.
Diversification Opportunities for Samsung SDI and Namyang Dairy
-0.87 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Samsung and Namyang is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Samsung SDI and Namyang Dairy Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Namyang Dairy Products and Samsung SDI 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 Samsung SDI are associated (or correlated) with Namyang Dairy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Namyang Dairy Products has no effect on the direction of Samsung SDI i.e., Samsung SDI and Namyang Dairy go up and down completely randomly.
Pair Corralation between Samsung SDI and Namyang Dairy
Assuming the 90 days trading horizon Samsung SDI is expected to under-perform the Namyang Dairy. But the stock apears to be less risky and, when comparing its historical volatility, Samsung SDI is 15.02 times less risky than Namyang Dairy. The stock trades about -0.05 of its potential returns per unit of risk. The Namyang Dairy Products is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 4,682,374 in Namyang Dairy Products on September 16, 2024 and sell it today you would earn a total of 1,477,626 from holding Namyang Dairy Products or generate 31.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 98.35% |
| Values | Daily Returns |
Samsung SDI vs. Namyang Dairy Products
Performance |
| Timeline |
| Samsung SDI |
| Namyang Dairy Products |
Samsung SDI and Namyang Dairy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung SDI and Namyang Dairy
The main advantage of trading using opposite Samsung SDI and Namyang Dairy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung SDI position performs unexpectedly, Namyang Dairy 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 Namyang Dairy will offset losses from the drop in Namyang Dairy's long position.| Samsung SDI vs. Cube Entertainment | Samsung SDI vs. Dreamus Company | Samsung SDI vs. LG Energy Solution | Samsung SDI vs. Dongwon System |
| Namyang Dairy vs. Samsung Electronics Co | Namyang Dairy vs. Samsung Electronics Co | Namyang Dairy vs. LG Energy Solution | Namyang Dairy vs. SK Hynix |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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