Correlation Between Samhwa Paint and LEENO Industrial

Can any of the company-specific risk be diversified away by investing in both Samhwa Paint and LEENO Industrial 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 LEENO Industrial 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 LEENO Industrial, you can compare the effects of market volatilities on Samhwa Paint and LEENO Industrial 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 LEENO Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samhwa Paint and LEENO Industrial.

Diversification Opportunities for Samhwa Paint and LEENO Industrial

0.74

Correlation Coefficient

Samhwa Paint  LEENO Industrial

Poor diversification

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

Pair Corralation between Samhwa Paint and LEENO Industrial

Assuming the 90 days trading horizon Samhwa Paint is expected to generate 16.64 times less return on investment than LEENO Industrial. But when comparing it to its historical volatility, Samhwa Paint Industrial is 1.06 times less risky than LEENO Industrial. It trades about 0.02 of its potential returns per unit of risk. LEENO Industrial is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest  15,330,000  in LEENO Industrial on September 21, 2024 and sell it today you would earn a total of  3,660,000  from holding LEENO Industrial or generate 23.87% return on investment over 90 days.

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

Samhwa Paint Industrial  vs.  LEENO Industrial

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.

LEENO Industrial

Risk-Adjusted Performance

1 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in LEENO Industrial are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, LEENO Industrial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Samhwa Paint and LEENO Industrial

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

The idea behind Samhwa Paint Industrial and LEENO Industrial 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.