Correlation Between Hwasung Industrial and Sam Yang

Can any of the company-specific risk be diversified away by investing in both Hwasung Industrial and Sam Yang 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 Hwasung Industrial and Sam Yang into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hwasung Industrial Co and Sam Yang Foods, you can compare the effects of market volatilities on Hwasung Industrial and Sam Yang 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 Hwasung Industrial with a short position of Sam Yang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hwasung Industrial and Sam Yang.

Diversification Opportunities for Hwasung Industrial and Sam Yang

0.07

Correlation Coefficient

Hwasung Industrial  Sam Yang

Significant diversification

The 3 months correlation between Hwasung and Sam is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Hwasung Industrial Co and Sam Yang Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sam Yang Foods and Hwasung Industrial 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 Hwasung Industrial Co are associated (or correlated) with Sam Yang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sam Yang Foods has no effect on the direction of Hwasung Industrial i.e., Hwasung Industrial and Sam Yang go up and down completely randomly.

Pair Corralation between Hwasung Industrial and Sam Yang

Assuming the 90 days trading horizon Hwasung Industrial is expected to generate 14.47 times less return on investment than Sam Yang. But when comparing it to its historical volatility, Hwasung Industrial Co is 3.17 times less risky than Sam Yang. It trades about 0.02 of its potential returns per unit of risk. Sam Yang Foods is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  78,139,100  in Sam Yang Foods on December 24, 2024 and sell it today you would earn a total of  13,560,900  from holding Sam Yang Foods or generate 17.35% return on investment over 90 days.

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

Hwasung Industrial Co  vs.  Sam Yang Foods

Hwasung Industrial

Risk-Adjusted Performance

Weak

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

Sam Yang Foods

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sam Yang Foods are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Sam Yang sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hwasung Industrial and Sam Yang

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

The idea behind Hwasung Industrial Co and Sam Yang Foods 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.