Correlation Between Samick Musical and Lotte Fine

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

By analyzing existing cross correlation between Samick Musical Instruments and Lotte Fine Chemical, you can compare the effects of market volatilities on Samick Musical and Lotte Fine 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 Samick Musical with a short position of Lotte Fine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samick Musical and Lotte Fine.

Diversification Opportunities for Samick Musical and Lotte Fine

-0.3

Correlation Coefficient

Samick Musical  Lotte Fine

Very good diversification

The 3 months correlation between Samick and Lotte is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Samick Musical Instruments and Lotte Fine Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lotte Fine Chemical and Samick Musical 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 Samick Musical Instruments are associated (or correlated) with Lotte Fine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lotte Fine Chemical has no effect on the direction of Samick Musical i.e., Samick Musical and Lotte Fine go up and down completely randomly.

Pair Corralation between Samick Musical and Lotte Fine

Assuming the 90 days trading horizon Samick Musical Instruments is expected to generate 0.76 times more return on investment than Lotte Fine. However, Samick Musical Instruments is 1.32 times less risky than Lotte Fine. It trades about 0.24 of its potential returns per unit of risk. Lotte Fine Chemical is currently generating about 0.14 per unit of risk. If you would invest  106,310  in Samick Musical Instruments on September 29, 2024 and sell it today you would earn a total of  12,990  from holding Samick Musical Instruments or generate 12.22% return on investment over 90 days.

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

Samick Musical Instruments  vs.  Lotte Fine Chemical

Samick Musical Instr

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Samick Musical Instruments are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Samick Musical sustained solid returns over the last few months and may actually be approaching a breakup point.

Lotte Fine Chemical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lotte Fine Chemical 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 January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Samick Musical and Lotte Fine

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

The idea behind Samick Musical Instruments and Lotte Fine Chemical 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.