Correlation Between Samsung SDI and Young Poong

Can any of the company-specific risk be diversified away by investing in both Samsung SDI and Young Poong 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 Samsung SDI and Young Poong into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Samsung SDI and Young Poong Corp, you can compare the effects of market volatilities on Samsung SDI and Young Poong 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 Samsung SDI with a short position of Young Poong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung SDI and Young Poong.

Diversification Opportunities for Samsung SDI and Young Poong

-0.63

Correlation Coefficient

Samsung SDI  Young Poong

Excellent diversification

The 3 months correlation between Samsung and Young is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Samsung SDI and Young Poong Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Young Poong Corp and Samsung SDI 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 Samsung SDI are associated (or correlated) with Young Poong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Young Poong Corp has no effect on the direction of Samsung SDI i.e., Samsung SDI and Young Poong go up and down completely randomly.

Pair Corralation between Samsung SDI and Young Poong

Assuming the 90 days trading horizon Samsung SDI is expected to under-perform the Young Poong. But the stock apears to be less risky and, when comparing its historical volatility, Samsung SDI is 1.27 times less risky than Young Poong. The stock trades about -0.19 of its potential returns per unit of risk. The Young Poong Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  36,597,800  in Young Poong Corp on October 10, 2024 and sell it today you would earn a total of  2,402,200  from holding Young Poong Corp or generate 6.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Samsung SDI  vs.  Young Poong Corp

Samsung SDI

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Samsung SDI has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Young Poong Corp

Risk-Adjusted Performance

3 of 100

Insignificant

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

Pair Trading with Samsung SDI and Young Poong

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

The idea behind Samsung SDI and Young Poong Corp 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.