Correlation Between Samsung SDI and KB No2

Can any of the company-specific risk be diversified away by investing in both Samsung SDI and KB No2 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 KB No2 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Samsung SDI and KB No2 Special, you can compare the effects of market volatilities on Samsung SDI and KB No2 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 KB No2. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung SDI and KB No2.

Diversification Opportunities for Samsung SDI and KB No2

0.93

Correlation Coefficient

Samsung SDI  KB No2

Almost no diversification

The 3 months correlation between Samsung and 192250 is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Samsung SDI and KB No2 Special in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KB No2 Special 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 KB No2. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KB No2 Special has no effect on the direction of Samsung SDI i.e., Samsung SDI and KB No2 go up and down completely randomly.

Pair Corralation between Samsung SDI and KB No2

Assuming the 90 days trading horizon Samsung SDI is expected to under-perform the KB No2. But the stock apears to be less risky and, when comparing its historical volatility, Samsung SDI is 1.18 times less risky than KB No2. The stock trades about -0.08 of its potential returns per unit of risk. The KB No2 Special is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  773,000  in KB No2 Special on September 19, 2024 and sell it today you would earn a total of  39,000  from holding KB No2 Special or generate 5.05% return on investment over 90 days.

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

Samsung SDI  vs.  KB No2 Special

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 January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

KB No2 Special

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KB No2 Special 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 January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Samsung SDI and KB No2

The main advantage of trading using opposite Samsung SDI and KB No2 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung SDI position performs unexpectedly, KB No2 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 KB No2 will offset losses from the drop in KB No2's long position.

The idea behind Samsung SDI and KB No2 Special 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.