Correlation Between Samick Musical and Daesung Hi

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

Diversification Opportunities for Samick Musical and Daesung Hi

-0.39

Correlation Coefficient

Samick Musical  Daesung Hi

Very good diversification

The 3 months correlation between Samick and Daesung is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Samick Musical Instruments and Daesung Hi Tech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daesung Hi Tech 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 Daesung Hi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daesung Hi Tech has no effect on the direction of Samick Musical i.e., Samick Musical and Daesung Hi go up and down completely randomly.

Pair Corralation between Samick Musical and Daesung Hi

Assuming the 90 days trading horizon Samick Musical is expected to generate 5.77 times less return on investment than Daesung Hi. But when comparing it to its historical volatility, Samick Musical Instruments is 1.33 times less risky than Daesung Hi. It trades about 0.02 of its potential returns per unit of risk. Daesung Hi Tech Co is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  326,500  in Daesung Hi Tech Co on December 26, 2024 and sell it today you would earn a total of  73,000  from holding Daesung Hi Tech Co or generate 22.36% 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.  Daesung Hi Tech Co

Samick Musical Instr

Risk-Adjusted Performance

Weak

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

Daesung Hi Tech

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Daesung Hi Tech Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Daesung Hi sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Samick Musical and Daesung Hi

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

The idea behind Samick Musical Instruments and Daesung Hi Tech 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.