Correlation Between Samlip General and Grand Korea

Can any of the company-specific risk be diversified away by investing in both Samlip General and Grand Korea 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 Samlip General and Grand Korea into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Samlip General Foods and Grand Korea Leisure, you can compare the effects of market volatilities on Samlip General and Grand Korea 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 Samlip General with a short position of Grand Korea. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samlip General and Grand Korea.

Diversification Opportunities for Samlip General and Grand Korea

0.59

Correlation Coefficient

Samlip General  Grand Korea

Very weak diversification

The 3 months correlation between Samlip and Grand is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Samlip General Foods and Grand Korea Leisure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grand Korea Leisure and Samlip General 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 Samlip General Foods are associated (or correlated) with Grand Korea. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grand Korea Leisure has no effect on the direction of Samlip General i.e., Samlip General and Grand Korea go up and down completely randomly.

Pair Corralation between Samlip General and Grand Korea

Assuming the 90 days trading horizon Samlip General is expected to generate 1.4 times less return on investment than Grand Korea. But when comparing it to its historical volatility, Samlip General Foods is 1.55 times less risky than Grand Korea. It trades about 0.11 of its potential returns per unit of risk. Grand Korea Leisure is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,074,000  in Grand Korea Leisure on September 21, 2024 and sell it today you would earn a total of  52,000  from holding Grand Korea Leisure or generate 4.84% return on investment over 90 days.

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

Samlip General Foods  vs.  Grand Korea Leisure

Samlip General Foods

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Samlip General Foods has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Samlip General is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Grand Korea Leisure

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Grand Korea Leisure has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Grand Korea is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Samlip General and Grand Korea

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

The idea behind Samlip General Foods and Grand Korea Leisure 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.