Correlation Between Samick Musical and INNOX Advanced

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

Diversification Opportunities for Samick Musical and INNOX Advanced

-0.55

Correlation Coefficient

Samick Musical  INNOX Advanced

Excellent diversification

The 3 months correlation between Samick and INNOX is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Samick Musical Instruments and INNOX Advanced Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INNOX Advanced Materials 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 INNOX Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INNOX Advanced Materials has no effect on the direction of Samick Musical i.e., Samick Musical and INNOX Advanced go up and down completely randomly.

Pair Corralation between Samick Musical and INNOX Advanced

Assuming the 90 days trading horizon Samick Musical Instruments is expected to generate 0.67 times more return on investment than INNOX Advanced. However, Samick Musical Instruments is 1.49 times less risky than INNOX Advanced. It trades about 0.24 of its potential returns per unit of risk. INNOX Advanced Materials is currently generating about -0.04 per unit of risk. If you would invest  110,700  in Samick Musical Instruments on September 19, 2024 and sell it today you would earn a total of  12,300  from holding Samick Musical Instruments or generate 11.11% return on investment over 90 days.

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

Samick Musical Instruments  vs.  INNOX Advanced Materials

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.

INNOX Advanced Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days INNOX Advanced Materials 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 INNOX Advanced

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

The idea behind Samick Musical Instruments and INNOX Advanced Materials 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.