Correlation Between Samyang Foods and COWAY

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

Diversification Opportunities for Samyang Foods and COWAY

-0.28

Correlation Coefficient

Samyang Foods  COWAY

Very good diversification

The 3 months correlation between Samyang and COWAY is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Samyang Foods Co and COWAY Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COWAY 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 COWAY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COWAY has no effect on the direction of Samyang Foods i.e., Samyang Foods and COWAY go up and down completely randomly.

Pair Corralation between Samyang Foods and COWAY

Assuming the 90 days trading horizon Samyang Foods Co is expected to generate 1.39 times more return on investment than COWAY. However, Samyang Foods is 1.39 times more volatile than COWAY Co. It trades about 0.11 of its potential returns per unit of risk. COWAY Co is currently generating about 0.05 per unit of risk. If you would invest  48,100,000  in Samyang Foods Co on September 5, 2024 and sell it today you would earn a total of  10,100,000  from holding Samyang Foods Co or generate 21.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.31%
Values	Daily Returns

Samyang Foods Co  vs.  COWAY Co

Samyang Foods

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Samyang Foods Co are ranked lower than 8 (%) 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.

COWAY

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in COWAY Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, COWAY may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Samyang Foods and COWAY

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

The idea behind Samyang Foods Co and COWAY 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.