Correlation Between Sam Yang and Design

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

Diversification Opportunities for Sam Yang and Design

-0.26

Correlation Coefficient

Sam Yang  Design

Very good diversification

The 3 months correlation between Sam and Design is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Sam Yang Foods and Design Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Design 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 Design. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Design has no effect on the direction of Sam Yang i.e., Sam Yang and Design go up and down completely randomly.

Pair Corralation between Sam Yang and Design

Assuming the 90 days trading horizon Sam Yang Foods is expected to generate 0.46 times more return on investment than Design. However, Sam Yang Foods is 2.18 times less risky than Design. It trades about 0.17 of its potential returns per unit of risk. Design Co is currently generating about -0.15 per unit of risk. If you would invest  54,400,000  in Sam Yang Foods on October 23, 2024 and sell it today you would earn a total of  19,300,000  from holding Sam Yang Foods or generate 35.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	78.69%
Values	Daily Returns

Sam Yang Foods  vs.  Design 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.

Design

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Sam Yang and Design

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

The idea behind Sam Yang Foods and Design 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.

Check out your portfolio center.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.