Correlation Between Samhwa Paint and WooDeumGee Farm

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

Diversification Opportunities for Samhwa Paint and WooDeumGee Farm

0.5

Correlation Coefficient

Samhwa Paint  WooDeumGee Farm

Very weak diversification

The 3 months correlation between Samhwa and WooDeumGee is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Samhwa Paint Industrial and WooDeumGee Farm Co, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WooDeumGee Farm Co, 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 WooDeumGee Farm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WooDeumGee Farm Co, has no effect on the direction of Samhwa Paint i.e., Samhwa Paint and WooDeumGee Farm go up and down completely randomly.

Pair Corralation between Samhwa Paint and WooDeumGee Farm

Assuming the 90 days trading horizon Samhwa Paint Industrial is expected to generate 0.77 times more return on investment than WooDeumGee Farm. However, Samhwa Paint Industrial is 1.3 times less risky than WooDeumGee Farm. It trades about 0.04 of its potential returns per unit of risk. WooDeumGee Farm Co, is currently generating about -0.12 per unit of risk. If you would invest  649,000  in Samhwa Paint Industrial on November 29, 2024 and sell it today you would earn a total of  23,000  from holding Samhwa Paint Industrial or generate 3.54% return on investment over 90 days.

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

Samhwa Paint Industrial  vs.  WooDeumGee Farm Co,

Samhwa Paint Industrial

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Samhwa Paint Industrial are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. 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.

WooDeumGee Farm Co,

Risk-Adjusted Performance

Very Weak

Over the last 90 days WooDeumGee Farm Co, has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Samhwa Paint and WooDeumGee Farm

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

The idea behind Samhwa Paint Industrial and WooDeumGee Farm Co, 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.