Correlation Between Korea Computer and Sam Yang
Can any of the company-specific risk be diversified away by investing in both Korea Computer and Sam Yang 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 Korea Computer and Sam Yang into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea Computer and Sam Yang Foods, you can compare the effects of market volatilities on Korea Computer and Sam Yang 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 Korea Computer with a short position of Sam Yang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Computer and Sam Yang.
Diversification Opportunities for Korea Computer and Sam Yang
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Korea and Sam is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Korea Computer and Sam Yang Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sam Yang Foods and Korea Computer 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 Korea Computer are associated (or correlated) with Sam Yang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sam Yang Foods has no effect on the direction of Korea Computer i.e., Korea Computer and Sam Yang go up and down completely randomly.
Pair Corralation between Korea Computer and Sam Yang
Assuming the 90 days trading horizon Korea Computer is expected to generate 0.81 times more return on investment than Sam Yang. However, Korea Computer is 1.24 times less risky than Sam Yang. It trades about -0.19 of its potential returns per unit of risk. Sam Yang Foods is currently generating about -0.19 per unit of risk. If you would invest 531,000 in Korea Computer on November 5, 2024 and sell it today you would lose (29,000) from holding Korea Computer or give up 5.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Computer vs. Sam Yang Foods
Performance |
| Timeline |
| Korea Computer |
| Sam Yang Foods |
Korea Computer and Sam Yang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Computer and Sam Yang
The main advantage of trading using opposite Korea Computer and Sam Yang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Computer position performs unexpectedly, Sam Yang 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 Sam Yang will offset losses from the drop in Sam Yang's long position.| Korea Computer vs. Samsung Electronics Co | Korea Computer vs. Samsung Electronics Co | Korea Computer vs. Hyundai Motor Co | Korea Computer vs. Hyundai Motor |
| Sam Yang vs. Samyoung Electronics Co | Sam Yang vs. Woorim Machinery Co | Sam Yang vs. Cuckoo Electronics Co | Sam Yang vs. Korea Electronic Certification |
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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