Correlation Between Samick Musical and MohenzCoLtd

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

Diversification Opportunities for Samick Musical and MohenzCoLtd

-0.05

Correlation Coefficient

Samick Musical  MohenzCoLtd

Good diversification

The 3 months correlation between Samick and MohenzCoLtd is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Samick Musical Instruments and MohenzCoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MohenzCoLtd 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 MohenzCoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MohenzCoLtd has no effect on the direction of Samick Musical i.e., Samick Musical and MohenzCoLtd go up and down completely randomly.

Pair Corralation between Samick Musical and MohenzCoLtd

Assuming the 90 days trading horizon Samick Musical is expected to generate 1.01 times less return on investment than MohenzCoLtd. But when comparing it to its historical volatility, Samick Musical Instruments is 2.3 times less risky than MohenzCoLtd. It trades about 0.19 of its potential returns per unit of risk. MohenzCoLtd is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  280,000  in MohenzCoLtd on September 15, 2024 and sell it today you would earn a total of  33,500  from holding MohenzCoLtd or generate 11.96% 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.  MohenzCoLtd

Samick Musical Instr

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Samick Musical Instruments are ranked lower than 14 (%) 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.

MohenzCoLtd

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in MohenzCoLtd are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, MohenzCoLtd sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Samick Musical and MohenzCoLtd

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

The idea behind Samick Musical Instruments and MohenzCoLtd 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.