Correlation Between Sam Yang and E Mart

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

Diversification Opportunities for Sam Yang and E Mart

0.53

Correlation Coefficient

Sam Yang  E Mart

Very weak diversification

The 3 months correlation between Sam and 139480 is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Sam Yang Foods and E Mart in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on E Mart 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 E Mart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of E Mart has no effect on the direction of Sam Yang i.e., Sam Yang and E Mart go up and down completely randomly.

Pair Corralation between Sam Yang and E Mart

Assuming the 90 days trading horizon Sam Yang Foods is expected to generate 1.13 times more return on investment than E Mart. However, Sam Yang is 1.13 times more volatile than E Mart. It trades about 0.16 of its potential returns per unit of risk. E Mart is currently generating about 0.03 per unit of risk. If you would invest  53,800,000  in Sam Yang Foods on October 24, 2024 and sell it today you would earn a total of  18,700,000  from holding Sam Yang Foods or generate 34.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Sam Yang Foods  vs.  E Mart

Sam Yang Foods

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sam Yang Foods are ranked lower than 12 (%) 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.

E Mart

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in E Mart are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, E Mart 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 E Mart

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

The idea behind Sam Yang Foods and E Mart 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.