Correlation Between Sam Yang and System

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

Diversification Opportunities for Sam Yang and System

0.0

Correlation Coefficient

Sam Yang  System

Pay attention - limited upside

The 3 months correlation between Sam and System is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Sam Yang Foods and System and Application in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on System and Application 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 System. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of System and Application has no effect on the direction of Sam Yang i.e., Sam Yang and System go up and down completely randomly.

Pair Corralation between Sam Yang and System

Assuming the 90 days trading horizon Sam Yang Foods is expected to generate 1.52 times more return on investment than System. However, Sam Yang is 1.52 times more volatile than System and Application. It trades about 0.11 of its potential returns per unit of risk. System and Application is currently generating about 0.0 per unit of risk. 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	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Sam Yang Foods  vs.  System and Application

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.

System and Application

Risk-Adjusted Performance

Very Weak

Over the last 90 days System and Application has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, System 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 System

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

The idea behind Sam Yang Foods and System and Application 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.