Correlation Between Isu Chemical and Samyang Foods

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

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

Diversification Opportunities for Isu Chemical and Samyang Foods

0.35

Correlation Coefficient

Isu Chemical  Samyang Foods

Weak diversification

The 3 months correlation between Isu and Samyang is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Isu Chemical Co and Samyang Foods Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samyang Foods and Isu Chemical 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 Isu Chemical Co are associated (or correlated) with Samyang Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samyang Foods has no effect on the direction of Isu Chemical i.e., Isu Chemical and Samyang Foods go up and down completely randomly.

Pair Corralation between Isu Chemical and Samyang Foods

Assuming the 90 days trading horizon Isu Chemical Co is expected to under-perform the Samyang Foods. But the stock apears to be less risky and, when comparing its historical volatility, Isu Chemical Co is 1.18 times less risky than Samyang Foods. The stock trades about 0.0 of its potential returns per unit of risk. The Samyang Foods Co is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  75,744,000  in Samyang Foods Co on December 23, 2024 and sell it today you would earn a total of  15,956,000  from holding Samyang Foods Co or generate 21.07% return on investment over 90 days.

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

Isu Chemical Co  vs.  Samyang Foods Co

Isu Chemical

Risk-Adjusted Performance

Very Weak

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

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 9 (%) 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.

Pair Trading with Isu Chemical and Samyang Foods

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

The idea behind Isu Chemical Co and Samyang Foods 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.

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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.