Correlation Between Humax and Sam Chun
Can any of the company-specific risk be diversified away by investing in both Humax and Sam Chun 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 Humax and Sam Chun into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Humax Co and Sam Chun Dang, you can compare the effects of market volatilities on Humax and Sam Chun 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 Humax with a short position of Sam Chun. Check out your portfolio center. Please also check ongoing floating volatility patterns of Humax and Sam Chun.
Diversification Opportunities for Humax and Sam Chun
Almost no diversification
The 3 months correlation between Humax and Sam is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Humax Co and Sam Chun Dang in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sam Chun Dang and Humax 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 Humax Co are associated (or correlated) with Sam Chun. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sam Chun Dang has no effect on the direction of Humax i.e., Humax and Sam Chun go up and down completely randomly.
Pair Corralation between Humax and Sam Chun
Assuming the 90 days trading horizon Humax Co is expected to under-perform the Sam Chun. But the stock apears to be less risky and, when comparing its historical volatility, Humax Co is 2.2 times less risky than Sam Chun. The stock trades about -0.15 of its potential returns per unit of risk. The Sam Chun Dang is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 5,820,000 in Sam Chun Dang on September 12, 2024 and sell it today you would earn a total of 3,980,000 from holding Sam Chun Dang or generate 68.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Humax Co vs. Sam Chun Dang
Performance |
| Timeline |
| Humax |
| Sam Chun Dang |
Humax and Sam Chun Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Humax and Sam Chun
The main advantage of trading using opposite Humax and Sam Chun positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Humax position performs unexpectedly, Sam Chun 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 Chun will offset losses from the drop in Sam Chun's long position.The idea behind Humax Co and Sam Chun Dang pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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