Correlation Between Sam A and Solus Advanced
Can any of the company-specific risk be diversified away by investing in both Sam A and Solus Advanced 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 Sam A and Solus Advanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sam A Pharm Co and Solus Advanced Materials, you can compare the effects of market volatilities on Sam A and Solus Advanced 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 Sam A with a short position of Solus Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sam A and Solus Advanced.
Diversification Opportunities for Sam A and Solus Advanced
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Sam and Solus is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Sam A Pharm Co and Solus Advanced Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solus Advanced Materials and Sam A 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 Sam A Pharm Co are associated (or correlated) with Solus Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solus Advanced Materials has no effect on the direction of Sam A i.e., Sam A and Solus Advanced go up and down completely randomly.
Pair Corralation between Sam A and Solus Advanced
Assuming the 90 days trading horizon Sam A is expected to generate 1.21 times less return on investment than Solus Advanced. But when comparing it to its historical volatility, Sam A Pharm Co is 1.8 times less risky than Solus Advanced. It trades about 0.48 of its potential returns per unit of risk. Solus Advanced Materials is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 766,000 in Solus Advanced Materials on October 9, 2024 and sell it today you would earn a total of 159,000 from holding Solus Advanced Materials or generate 20.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sam A Pharm Co vs. Solus Advanced Materials
Performance |
| Timeline |
| Sam A Pharm |
| Solus Advanced Materials |
Sam A and Solus Advanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sam A and Solus Advanced
The main advantage of trading using opposite Sam A and Solus Advanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sam A position performs unexpectedly, Solus Advanced 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 Solus Advanced will offset losses from the drop in Solus Advanced's long position.| Sam A vs. Samsung Publishing Co | Sam A vs. INNOX Advanced Materials | Sam A vs. RF Materials Co | Sam A vs. LS Materials |
| Solus Advanced vs. SK IE Technology | Solus Advanced vs. DAEDUCK ELECTRONICS CoLtd | Solus Advanced vs. Sungmoon Electronics Co |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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