Correlation Between Samyang Foods and Dongbang Transport

Can any of the company-specific risk be diversified away by investing in both Samyang Foods and Dongbang Transport 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 Samyang Foods and Dongbang Transport into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Samyang Foods Co and Dongbang Transport Logistics, you can compare the effects of market volatilities on Samyang Foods and Dongbang Transport 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 Samyang Foods with a short position of Dongbang Transport. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samyang Foods and Dongbang Transport.

Diversification Opportunities for Samyang Foods and Dongbang Transport

0.25

Correlation Coefficient

Samyang Foods  Dongbang Transport

Modest diversification

The 3 months correlation between Samyang and Dongbang is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Samyang Foods Co and Dongbang Transport Logistics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongbang Transport and Samyang Foods 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 Samyang Foods Co are associated (or correlated) with Dongbang Transport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongbang Transport has no effect on the direction of Samyang Foods i.e., Samyang Foods and Dongbang Transport go up and down completely randomly.

Pair Corralation between Samyang Foods and Dongbang Transport

Assuming the 90 days trading horizon Samyang Foods Co is expected to generate 1.5 times more return on investment than Dongbang Transport. However, Samyang Foods is 1.5 times more volatile than Dongbang Transport Logistics. It trades about 0.1 of its potential returns per unit of risk. Dongbang Transport Logistics is currently generating about 0.04 per unit of risk. If you would invest  75,744,000  in Samyang Foods Co on December 27, 2024 and sell it today you would earn a total of  11,456,000  from holding Samyang Foods Co or generate 15.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Samyang Foods Co  vs.  Dongbang Transport Logistics

Samyang Foods

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Samyang Foods Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Samyang Foods sustained solid returns over the last few months and may actually be approaching a breakup point.

Dongbang Transport

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dongbang Transport Logistics are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Dongbang Transport is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Samyang Foods and Dongbang Transport

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

The idea behind Samyang Foods Co and Dongbang Transport Logistics 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.