Correlation Between Samsung SDI and Taewoong CoLtd
Can any of the company-specific risk be diversified away by investing in both Samsung SDI and Taewoong CoLtd 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 Taewoong CoLtd into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Samsung SDI and Taewoong CoLtd, you can compare the effects of market volatilities on Samsung SDI and Taewoong CoLtd 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 Taewoong CoLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung SDI and Taewoong CoLtd.
Diversification Opportunities for Samsung SDI and Taewoong CoLtd
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Samsung and Taewoong is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Samsung SDI and Taewoong CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taewoong CoLtd 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 Taewoong CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taewoong CoLtd has no effect on the direction of Samsung SDI i.e., Samsung SDI and Taewoong CoLtd go up and down completely randomly.
Pair Corralation between Samsung SDI and Taewoong CoLtd
Assuming the 90 days trading horizon Samsung SDI is expected to generate 0.66 times more return on investment than Taewoong CoLtd. However, Samsung SDI is 1.51 times less risky than Taewoong CoLtd. It trades about -0.29 of its potential returns per unit of risk. Taewoong CoLtd is currently generating about -0.21 per unit of risk. If you would invest 32,700,000 in Samsung SDI on September 1, 2024 and sell it today you would lose (7,250,000) from holding Samsung SDI or give up 22.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung SDI vs. Taewoong CoLtd
Performance |
| Timeline |
| Samsung SDI |
| Taewoong CoLtd |
Samsung SDI and Taewoong CoLtd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung SDI and Taewoong CoLtd
The main advantage of trading using opposite Samsung SDI and Taewoong CoLtd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung SDI position performs unexpectedly, Taewoong CoLtd 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 Taewoong CoLtd will offset losses from the drop in Taewoong CoLtd's long position.| Samsung SDI vs. Dongsin Engineering Construction | Samsung SDI vs. Doosan Fuel Cell | Samsung SDI vs. Daishin Balance 1 | Samsung SDI vs. Total Soft Bank |
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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