Correlation Between Solution Advanced and Samsung Heavy
Can any of the company-specific risk be diversified away by investing in both Solution Advanced and Samsung Heavy 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 Solution Advanced and Samsung Heavy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Solution Advanced Technology and Samsung Heavy Industries, you can compare the effects of market volatilities on Solution Advanced and Samsung Heavy 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 Solution Advanced with a short position of Samsung Heavy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Solution Advanced and Samsung Heavy.
Diversification Opportunities for Solution Advanced and Samsung Heavy
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Solution and Samsung is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Solution Advanced Technology and Samsung Heavy Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung Heavy Industries and Solution Advanced 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 Solution Advanced Technology are associated (or correlated) with Samsung Heavy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samsung Heavy Industries has no effect on the direction of Solution Advanced i.e., Solution Advanced and Samsung Heavy go up and down completely randomly.
Pair Corralation between Solution Advanced and Samsung Heavy
Assuming the 90 days trading horizon Solution Advanced Technology is expected to generate 1.35 times more return on investment than Samsung Heavy. However, Solution Advanced is 1.35 times more volatile than Samsung Heavy Industries. It trades about 0.09 of its potential returns per unit of risk. Samsung Heavy Industries is currently generating about -0.21 per unit of risk. If you would invest 136,900 in Solution Advanced Technology on September 12, 2024 and sell it today you would earn a total of 7,900 from holding Solution Advanced Technology or generate 5.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Solution Advanced Technology vs. Samsung Heavy Industries
Performance |
| Timeline |
| Solution Advanced |
| Samsung Heavy Industries |
Solution Advanced and Samsung Heavy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Solution Advanced and Samsung Heavy
The main advantage of trading using opposite Solution Advanced and Samsung Heavy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solution Advanced position performs unexpectedly, Samsung Heavy 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 Heavy will offset losses from the drop in Samsung Heavy's long position.| Solution Advanced vs. Samsung Electronics Co | Solution Advanced vs. Samsung Electronics Co | Solution Advanced vs. LG Energy Solution | Solution Advanced vs. SK Hynix |
| Samsung Heavy vs. Korea New Network | Samsung Heavy vs. Solution Advanced Technology | Samsung Heavy vs. Busan Industrial Co | Samsung Heavy vs. Busan Ind |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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