Correlation Between Mirae Asset and Samsung KODEX

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

By analyzing existing cross correlation between Mirae Asset Daewoo and Samsung KODEX Machinary, you can compare the effects of market volatilities on Mirae Asset and Samsung KODEX 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 Mirae Asset with a short position of Samsung KODEX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mirae Asset and Samsung KODEX.

Diversification Opportunities for Mirae Asset and Samsung KODEX

0.49

Correlation Coefficient

Mirae Asset  Samsung KODEX

Very weak diversification

The 3 months correlation between Mirae and Samsung is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Mirae Asset Daewoo and Samsung KODEX Machinary in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung KODEX Machinary and Mirae Asset 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 Mirae Asset Daewoo are associated (or correlated) with Samsung KODEX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samsung KODEX Machinary has no effect on the direction of Mirae Asset i.e., Mirae Asset and Samsung KODEX go up and down completely randomly.

Pair Corralation between Mirae Asset and Samsung KODEX

Assuming the 90 days trading horizon Mirae Asset is expected to generate 1.24 times less return on investment than Samsung KODEX. But when comparing it to its historical volatility, Mirae Asset Daewoo is 1.91 times less risky than Samsung KODEX. It trades about 0.2 of its potential returns per unit of risk. Samsung KODEX Machinary is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  691,000  in Samsung KODEX Machinary on December 24, 2024 and sell it today you would earn a total of  85,000  from holding Samsung KODEX Machinary or generate 12.3% return on investment over 90 days.

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

Mirae Asset Daewoo  vs.  Samsung KODEX Machinary

Mirae Asset Daewoo

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Mirae Asset Daewoo are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Mirae Asset may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Samsung KODEX Machinary

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Samsung KODEX Machinary are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Samsung KODEX sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mirae Asset and Samsung KODEX

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

The idea behind Mirae Asset Daewoo and Samsung KODEX Machinary 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.