Correlation Between Samlip General and Raontech

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

Diversification Opportunities for Samlip General and Raontech

0.9

Correlation Coefficient

Samlip General  Raontech

Almost no diversification

The 3 months correlation between Samlip and Raontech is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Samlip General Foods and Raontech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Raontech 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 Raontech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Raontech has no effect on the direction of Samlip General i.e., Samlip General and Raontech go up and down completely randomly.

Pair Corralation between Samlip General and Raontech

Assuming the 90 days trading horizon Samlip General Foods is expected to under-perform the Raontech. But the stock apears to be less risky and, when comparing its historical volatility, Samlip General Foods is 1.97 times less risky than Raontech. The stock trades about 0.0 of its potential returns per unit of risk. The Raontech is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  328,000  in Raontech on October 26, 2024 and sell it today you would lose (4,500) from holding Raontech or give up 1.37% of portfolio value over 90 days.

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

Samlip General Foods  vs.  Raontech

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.

Raontech

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Raontech are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Raontech 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 Raontech

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

The idea behind Samlip General Foods and Raontech 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.