Correlation Between Sung Bo and Samsung SDI

Can any of the company-specific risk be diversified away by investing in both Sung Bo and Samsung SDI 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 Sung Bo and Samsung SDI into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sung Bo Chemicals and Samsung SDI, you can compare the effects of market volatilities on Sung Bo and Samsung SDI 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 Sung Bo with a short position of Samsung SDI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sung Bo and Samsung SDI.

Diversification Opportunities for Sung Bo and Samsung SDI

-0.38

Correlation Coefficient

Sung Bo  Samsung SDI

Very good diversification

The 3 months correlation between Sung and Samsung is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Sung Bo Chemicals and Samsung SDI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung SDI and Sung Bo 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 Sung Bo Chemicals are associated (or correlated) with Samsung SDI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samsung SDI has no effect on the direction of Sung Bo i.e., Sung Bo and Samsung SDI go up and down completely randomly.

Pair Corralation between Sung Bo and Samsung SDI

Assuming the 90 days trading horizon Sung Bo Chemicals is expected to generate 0.56 times more return on investment than Samsung SDI. However, Sung Bo Chemicals is 1.79 times less risky than Samsung SDI. It trades about -0.01 of its potential returns per unit of risk. Samsung SDI is currently generating about -0.07 per unit of risk. If you would invest  289,820  in Sung Bo Chemicals on December 4, 2024 and sell it today you would lose (43,820) from holding Sung Bo Chemicals or give up 15.12% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.79%
Values	Daily Returns

Sung Bo Chemicals  vs.  Samsung SDI

Sung Bo Chemicals

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sung Bo Chemicals are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Sung Bo is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Samsung SDI

Risk-Adjusted Performance

Very Weak

Over the last 90 days Samsung SDI 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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Sung Bo and Samsung SDI

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

The idea behind Sung Bo Chemicals and Samsung SDI 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.