Correlation Between Samsung Life and Miwon Chemical
Can any of the company-specific risk be diversified away by investing in both Samsung Life and Miwon Chemical 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 Life and Miwon Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Samsung Life and Miwon Chemical, you can compare the effects of market volatilities on Samsung Life and Miwon Chemical 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 Life with a short position of Miwon Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Life and Miwon Chemical.
Diversification Opportunities for Samsung Life and Miwon Chemical
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Samsung and Miwon is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Life and Miwon Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Miwon Chemical and Samsung Life 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 Life are associated (or correlated) with Miwon Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Miwon Chemical has no effect on the direction of Samsung Life i.e., Samsung Life and Miwon Chemical go up and down completely randomly.
Pair Corralation between Samsung Life and Miwon Chemical
Assuming the 90 days trading horizon Samsung Life is expected to generate 3.09 times more return on investment than Miwon Chemical. However, Samsung Life is 3.09 times more volatile than Miwon Chemical. It trades about 0.08 of its potential returns per unit of risk. Miwon Chemical is currently generating about 0.1 per unit of risk. If you would invest 6,910,000 in Samsung Life on September 1, 2024 and sell it today you would earn a total of 3,800,000 from holding Samsung Life or generate 54.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Life vs. Miwon Chemical
Performance |
| Timeline |
| Samsung Life |
| Miwon Chemical |
Samsung Life and Miwon Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Life and Miwon Chemical
The main advantage of trading using opposite Samsung Life and Miwon Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Life position performs unexpectedly, Miwon Chemical 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 Miwon Chemical will offset losses from the drop in Miwon Chemical's long position.| Samsung Life vs. Ilji Technology Co | Samsung Life vs. Daou Technology | Samsung Life vs. Polaris Office Corp | Samsung Life vs. AurosTechnology |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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