Correlation Between Iljin Display and Samwon Steel
Can any of the company-specific risk be diversified away by investing in both Iljin Display and Samwon Steel 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 Iljin Display and Samwon Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Iljin Display and Samwon Steel, you can compare the effects of market volatilities on Iljin Display and Samwon Steel 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 Iljin Display with a short position of Samwon Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iljin Display and Samwon Steel.
Diversification Opportunities for Iljin Display and Samwon Steel
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Iljin and Samwon is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Iljin Display and Samwon Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samwon Steel and Iljin Display 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 Iljin Display are associated (or correlated) with Samwon Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samwon Steel has no effect on the direction of Iljin Display i.e., Iljin Display and Samwon Steel go up and down completely randomly.
Pair Corralation between Iljin Display and Samwon Steel
Assuming the 90 days trading horizon Iljin Display is expected to generate 1.46 times more return on investment than Samwon Steel. However, Iljin Display is 1.46 times more volatile than Samwon Steel. It trades about 0.19 of its potential returns per unit of risk. Samwon Steel is currently generating about 0.01 per unit of risk. If you would invest 82,000 in Iljin Display on November 3, 2024 and sell it today you would earn a total of 6,300 from holding Iljin Display or generate 7.68% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Iljin Display vs. Samwon Steel
Performance |
Timeline |
Iljin Display |
Samwon Steel |
Iljin Display and Samwon Steel Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Iljin Display and Samwon Steel
The main advantage of trading using opposite Iljin Display and Samwon Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iljin Display position performs unexpectedly, Samwon Steel 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 Samwon Steel will offset losses from the drop in Samwon Steel's long position.Iljin Display vs. Korean Air Lines | Iljin Display vs. Nice Information Telecommunication | Iljin Display vs. Dongbu Insurance Co | Iljin Display vs. Daishin Information Communications |
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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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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