Correlation Between Sam Yang and Clean Science

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

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

Diversification Opportunities for Sam Yang and Clean Science

-0.11

Correlation Coefficient

Sam Yang  Clean Science

Good diversification

The 3 months correlation between Sam and Clean is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Sam Yang Foods and Clean Science co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Clean Science co and Sam Yang 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 Sam Yang Foods are associated (or correlated) with Clean Science. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Clean Science co has no effect on the direction of Sam Yang i.e., Sam Yang and Clean Science go up and down completely randomly.

Pair Corralation between Sam Yang and Clean Science

Assuming the 90 days trading horizon Sam Yang Foods is expected to under-perform the Clean Science. But the stock apears to be less risky and, when comparing its historical volatility, Sam Yang Foods is 1.2 times less risky than Clean Science. The stock trades about -0.07 of its potential returns per unit of risk. The Clean Science co is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  468,500  in Clean Science co on October 23, 2024 and sell it today you would earn a total of  54,500  from holding Clean Science co or generate 11.63% return on investment over 90 days.

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

Sam Yang Foods  vs.  Clean Science co

Sam Yang Foods

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sam Yang Foods are ranked lower than 13 (%) 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.

Clean Science co

Risk-Adjusted Performance

1 of 100

Weak

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

Pair Trading with Sam Yang and Clean Science

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

The idea behind Sam Yang Foods and Clean Science 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.