Correlation Between Xavis and Samsung SDI
Can any of the company-specific risk be diversified away by investing in both Xavis 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 Xavis and Samsung SDI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xavis Co and Samsung SDI, you can compare the effects of market volatilities on Xavis 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 Xavis with a short position of Samsung SDI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xavis and Samsung SDI.
Diversification Opportunities for Xavis and Samsung SDI
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Xavis and Samsung is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Xavis Co and Samsung SDI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung SDI and Xavis 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 Xavis Co 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 Xavis i.e., Xavis and Samsung SDI go up and down completely randomly.
Pair Corralation between Xavis and Samsung SDI
Assuming the 90 days trading horizon Xavis Co is expected to under-perform the Samsung SDI. But the stock apears to be less risky and, when comparing its historical volatility, Xavis Co is 1.35 times less risky than Samsung SDI. The stock trades about -0.41 of its potential returns per unit of risk. The Samsung SDI is currently generating about -0.27 of returns per unit of risk over similar time horizon. If you would invest 33,900,000 in Samsung SDI on August 31, 2024 and sell it today you would lose (6,700,000) from holding Samsung SDI or give up 19.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xavis Co vs. Samsung SDI
Performance |
| Timeline |
| Xavis |
| Samsung SDI |
Xavis and Samsung SDI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xavis and Samsung SDI
The main advantage of trading using opposite Xavis and Samsung SDI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xavis 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.The idea behind Xavis Co and Samsung SDI 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.| Samsung SDI vs. Dongsin Engineering Construction | Samsung SDI vs. Doosan Fuel Cell | Samsung SDI vs. Daishin Balance 1 | Samsung SDI vs. Total Soft Bank |
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 CEOs Directory module to screen CEOs from public companies around the world.
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