Correlation Between Lee Ku and Samsung SDI
Can any of the company-specific risk be diversified away by investing in both Lee Ku and Samsung SDI 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 Lee Ku and Samsung SDI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lee Ku Industrial and Samsung SDI, you can compare the effects of market volatilities on Lee Ku and Samsung SDI 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 Lee Ku with a short position of Samsung SDI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lee Ku and Samsung SDI.
Diversification Opportunities for Lee Ku and Samsung SDI
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Lee and Samsung is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Lee Ku Industrial and Samsung SDI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung SDI and Lee Ku 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 Lee Ku Industrial are associated (or correlated) with Samsung SDI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samsung SDI has no effect on the direction of Lee Ku i.e., Lee Ku and Samsung SDI go up and down completely randomly.
Pair Corralation between Lee Ku and Samsung SDI
Assuming the 90 days trading horizon Lee Ku Industrial is expected to generate 0.8 times more return on investment than Samsung SDI. However, Lee Ku Industrial is 1.26 times less risky than Samsung SDI. It trades about 0.03 of its potential returns per unit of risk. Samsung SDI is currently generating about -0.36 per unit of risk. If you would invest 411,000 in Lee Ku Industrial on November 7, 2024 and sell it today you would earn a total of 2,500 from holding Lee Ku Industrial or generate 0.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 94.44% |
| Values | Daily Returns |
Lee Ku Industrial vs. Samsung SDI
Performance |
| Timeline |
| Lee Ku Industrial |
| Samsung SDI |
Lee Ku and Samsung SDI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lee Ku and Samsung SDI
The main advantage of trading using opposite Lee Ku and Samsung SDI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lee Ku position performs unexpectedly, Samsung SDI 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 Samsung SDI will offset losses from the drop in Samsung SDI's long position.| Lee Ku vs. Hyundai Home Shopping | Lee Ku vs. Narae Nanotech Corp | Lee Ku vs. Dongwoon Anatech Co | Lee Ku vs. Miwon Chemicals Co |
| Samsung SDI vs. SK IE Technology | Samsung SDI vs. Seoul Semiconductor Co | Samsung SDI vs. Cots Technology Co | Samsung SDI vs. Choil Aluminum |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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