Correlation Between Sam Chun and Oscotec

Can any of the company-specific risk be diversified away by investing in both Sam Chun and Oscotec 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 Sam Chun and Oscotec into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sam Chun Dang and Oscotec, you can compare the effects of market volatilities on Sam Chun and Oscotec 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 Sam Chun with a short position of Oscotec. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sam Chun and Oscotec.

Diversification Opportunities for Sam Chun and Oscotec

0.74

Correlation Coefficient

Sam Chun  Oscotec

Poor diversification

The 3 months correlation between Sam and Oscotec is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Sam Chun Dang and Oscotec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oscotec and Sam Chun 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 Sam Chun Dang are associated (or correlated) with Oscotec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oscotec has no effect on the direction of Sam Chun i.e., Sam Chun and Oscotec go up and down completely randomly.

Pair Corralation between Sam Chun and Oscotec

Assuming the 90 days trading horizon Sam Chun is expected to generate 1.29 times less return on investment than Oscotec. In addition to that, Sam Chun is 1.29 times more volatile than Oscotec. It trades about 0.09 of its total potential returns per unit of risk. Oscotec is currently generating about 0.16 per unit of volatility. If you would invest  2,365,000  in Oscotec on December 25, 2024 and sell it today you would earn a total of  760,000  from holding Oscotec or generate 32.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Sam Chun Dang  vs.  Oscotec

Sam Chun Dang

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sam Chun Dang are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Sam Chun sustained solid returns over the last few months and may actually be approaching a breakup point.

Oscotec

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Oscotec are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Oscotec sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sam Chun and Oscotec

The main advantage of trading using opposite Sam Chun and Oscotec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sam Chun position performs unexpectedly, Oscotec 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 Oscotec will offset losses from the drop in Oscotec's long position.

The idea behind Sam Chun Dang and Oscotec 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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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.