Correlation Between Samhwa Paint and Echomarketing CoLtd

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

Diversification Opportunities for Samhwa Paint and Echomarketing CoLtd

0.6

Correlation Coefficient

Samhwa Paint  Echomarketing CoLtd

Poor diversification

The 3 months correlation between Samhwa and Echomarketing is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Samhwa Paint Industrial and Echomarketing CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Echomarketing CoLtd 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 Echomarketing CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Echomarketing CoLtd has no effect on the direction of Samhwa Paint i.e., Samhwa Paint and Echomarketing CoLtd go up and down completely randomly.

Pair Corralation between Samhwa Paint and Echomarketing CoLtd

Assuming the 90 days trading horizon Samhwa Paint is expected to generate 2.44 times less return on investment than Echomarketing CoLtd. In addition to that, Samhwa Paint is 1.06 times more volatile than Echomarketing CoLtd. It trades about 0.02 of its total potential returns per unit of risk. Echomarketing CoLtd is currently generating about 0.06 per unit of volatility. If you would invest  979,000  in Echomarketing CoLtd on September 21, 2024 and sell it today you would earn a total of  26,000  from holding Echomarketing CoLtd or generate 2.66% 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.  Echomarketing CoLtd

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.

Echomarketing CoLtd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Echomarketing CoLtd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Echomarketing CoLtd 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 Echomarketing CoLtd

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

The idea behind Samhwa Paint Industrial and Echomarketing CoLtd 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.

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 Bonds Directory module to find actively traded corporate debentures issued by US companies.