Correlation Between Samick Musical and RF Materials

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

Diversification Opportunities for Samick Musical and RF Materials

0.54

Correlation Coefficient

Samick Musical  RF Materials

Very weak diversification

The 3 months correlation between Samick and 327260 is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Samick Musical Instruments and RF Materials Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RF 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 RF Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RF Materials has no effect on the direction of Samick Musical i.e., Samick Musical and RF Materials go up and down completely randomly.

Pair Corralation between Samick Musical and RF Materials

Assuming the 90 days trading horizon Samick Musical Instruments is expected to under-perform the RF Materials. But the stock apears to be less risky and, when comparing its historical volatility, Samick Musical Instruments is 1.49 times less risky than RF Materials. The stock trades about -0.05 of its potential returns per unit of risk. The RF Materials Co is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  562,000  in RF Materials Co on December 4, 2024 and sell it today you would earn a total of  23,000  from holding RF Materials Co or generate 4.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Samick Musical Instruments  vs.  RF Materials Co

Samick Musical Instr

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Samick Musical Instruments are ranked lower than 5 (%) 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.

RF Materials

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in RF Materials Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, RF Materials may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Samick Musical and RF Materials

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

The idea behind Samick Musical Instruments and RF Materials 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.

Check out your portfolio center.

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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.