Correlation Between Samsung SDI and SebitChem
Can any of the company-specific risk be diversified away by investing in both Samsung SDI and SebitChem 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 SebitChem into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Samsung SDI and SebitChem Co, you can compare the effects of market volatilities on Samsung SDI and SebitChem 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 SebitChem. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung SDI and SebitChem.
Diversification Opportunities for Samsung SDI and SebitChem
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Samsung and SebitChem is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Samsung SDI and SebitChem Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SebitChem 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 SebitChem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SebitChem has no effect on the direction of Samsung SDI i.e., Samsung SDI and SebitChem go up and down completely randomly.
Pair Corralation between Samsung SDI and SebitChem
Assuming the 90 days trading horizon Samsung SDI is expected to generate 1.02 times more return on investment than SebitChem. However, Samsung SDI is 1.02 times more volatile than SebitChem Co. It trades about -0.17 of its potential returns per unit of risk. SebitChem Co is currently generating about -0.23 per unit of risk. If you would invest 36,900,000 in Samsung SDI on September 2, 2024 and sell it today you would lose (11,450,000) from holding Samsung SDI or give up 31.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung SDI vs. SebitChem Co
Performance |
| Timeline |
| Samsung SDI |
| SebitChem |
Samsung SDI and SebitChem Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung SDI and SebitChem
The main advantage of trading using opposite Samsung SDI and SebitChem positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung SDI position performs unexpectedly, SebitChem 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 SebitChem will offset losses from the drop in SebitChem's long position.| Samsung SDI vs. Iljin Display | Samsung SDI vs. Aprogen Healthcare Games | Samsung SDI vs. Clean Science co | Samsung SDI vs. Nable Communications |
| SebitChem vs. Samsung Electronics Co | SebitChem vs. Samsung Electronics Co | SebitChem vs. LG Energy Solution | SebitChem 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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