Correlation Between Samhwa Paint and Taegu Broadcasting

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

By analyzing existing cross correlation between Samhwa Paint Industrial and Taegu Broadcasting, you can compare the effects of market volatilities on Samhwa Paint and Taegu Broadcasting 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 Samhwa Paint with a short position of Taegu Broadcasting. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samhwa Paint and Taegu Broadcasting.

Diversification Opportunities for Samhwa Paint and Taegu Broadcasting

0.38

Correlation Coefficient

Samhwa Paint  Taegu Broadcasting

Weak diversification

The 3 months correlation between Samhwa and Taegu is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Samhwa Paint Industrial and Taegu Broadcasting in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Taegu Broadcasting and Samhwa Paint 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 Samhwa Paint Industrial are associated (or correlated) with Taegu Broadcasting. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Taegu Broadcasting has no effect on the direction of Samhwa Paint i.e., Samhwa Paint and Taegu Broadcasting go up and down completely randomly.

Pair Corralation between Samhwa Paint and Taegu Broadcasting

Assuming the 90 days trading horizon Samhwa Paint Industrial is expected to under-perform the Taegu Broadcasting. In addition to that, Samhwa Paint is 1.24 times more volatile than Taegu Broadcasting. It trades about -0.01 of its total potential returns per unit of risk. Taegu Broadcasting is currently generating about 0.13 per unit of volatility. If you would invest  71,500  in Taegu Broadcasting on September 5, 2024 and sell it today you would earn a total of  8,700  from holding Taegu Broadcasting or generate 12.17% return on investment over 90 days.

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

Samhwa Paint Industrial  vs.  Taegu Broadcasting

Samhwa Paint Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Samhwa Paint Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Samhwa Paint is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Taegu Broadcasting

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Taegu Broadcasting are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Taegu Broadcasting sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Samhwa Paint and Taegu Broadcasting

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

The idea behind Samhwa Paint Industrial and Taegu Broadcasting 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 CEOs Directory module to screen CEOs from public companies around the world.