Correlation Between Samsung SDI and Nobland International

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

By analyzing existing cross correlation between Samsung SDI and Nobland International, you can compare the effects of market volatilities on Samsung SDI and Nobland International 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 Nobland International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung SDI and Nobland International.

Diversification Opportunities for Samsung SDI and Nobland International

-0.56

Correlation Coefficient

Samsung SDI  Nobland International

Excellent diversification

The 3 months correlation between Samsung and Nobland is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Samsung SDI and Nobland International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nobland International 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 Nobland International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nobland International has no effect on the direction of Samsung SDI i.e., Samsung SDI and Nobland International go up and down completely randomly.

Pair Corralation between Samsung SDI and Nobland International

Assuming the 90 days trading horizon Samsung SDI is expected to generate 0.69 times more return on investment than Nobland International. However, Samsung SDI is 1.44 times less risky than Nobland International. It trades about -0.13 of its potential returns per unit of risk. Nobland International is currently generating about -0.2 per unit of risk. If you would invest  24,800,000  in Samsung SDI on October 21, 2024 and sell it today you would lose (1,400,000) from holding Samsung SDI or give up 5.65% of portfolio value over 90 days.

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

Samsung SDI  vs.  Nobland International

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.

Nobland International

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nobland International are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Nobland International may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Samsung SDI and Nobland International

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

The idea behind Samsung SDI and Nobland International 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.