Correlation Between Samlip General and Miwon Chemicals

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

Diversification Opportunities for Samlip General and Miwon Chemicals

0.73

Correlation Coefficient

Samlip General  Miwon Chemicals

Poor diversification

The 3 months correlation between Samlip and Miwon is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Samlip General Foods and Miwon Chemicals Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Miwon Chemicals 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 Miwon Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Miwon Chemicals has no effect on the direction of Samlip General i.e., Samlip General and Miwon Chemicals go up and down completely randomly.

Pair Corralation between Samlip General and Miwon Chemicals

Assuming the 90 days trading horizon Samlip General Foods is expected to generate 1.86 times more return on investment than Miwon Chemicals. However, Samlip General is 1.86 times more volatile than Miwon Chemicals Co. It trades about 0.08 of its potential returns per unit of risk. Miwon Chemicals Co is currently generating about 0.09 per unit of risk. If you would invest  4,534,581  in Samlip General Foods on October 25, 2024 and sell it today you would earn a total of  285,419  from holding Samlip General Foods or generate 6.29% return on investment over 90 days.

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

Samlip General Foods  vs.  Miwon Chemicals Co

Samlip General Foods

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Samlip General Foods are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Miwon Chemicals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Miwon Chemicals Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Miwon Chemicals 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 Miwon Chemicals

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

The idea behind Samlip General Foods and Miwon Chemicals 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.