Correlation Between Samsung SDI and NISSHA

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Can any of the company-specific risk be diversified away by investing in both Samsung SDI and NISSHA 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 SDI and NISSHA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Samsung SDI Co and NISSHA LTD, you can compare the effects of market volatilities on Samsung SDI and NISSHA 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 SDI with a short position of NISSHA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung SDI and NISSHA.

Diversification Opportunities for Samsung SDI and NISSHA

0.83
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Samsung and NISSHA is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Samsung SDI Co and NISSHA LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NISSHA LTD and Samsung SDI 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 SDI Co are associated (or correlated) with NISSHA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NISSHA LTD has no effect on the direction of Samsung SDI i.e., Samsung SDI and NISSHA go up and down completely randomly.

Pair Corralation between Samsung SDI and NISSHA

Assuming the 90 days trading horizon Samsung SDI Co is expected to under-perform the NISSHA. In addition to that, Samsung SDI is 1.41 times more volatile than NISSHA LTD. It trades about -0.08 of its total potential returns per unit of risk. NISSHA LTD is currently generating about 0.01 per unit of volatility. If you would invest  1,030  in NISSHA LTD on September 4, 2024 and sell it today you would lose (20.00) from holding NISSHA LTD or give up 1.94% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy99.74%
ValuesDaily Returns

Samsung SDI Co  vs.  NISSHA LTD

 Performance 
       Timeline  
Samsung SDI 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Samsung SDI Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.
NISSHA LTD 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days NISSHA LTD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Samsung SDI and NISSHA Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Samsung SDI and NISSHA

The main advantage of trading using opposite Samsung SDI and NISSHA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung SDI position performs unexpectedly, NISSHA 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 NISSHA will offset losses from the drop in NISSHA's long position.
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The idea behind Samsung SDI Co and NISSHA LTD 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.
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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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.

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