Correlation Between Tae Kyung and Samsung Publishing

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

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

Diversification Opportunities for Tae Kyung and Samsung Publishing

0.42

Correlation Coefficient

Tae Kyung  Samsung Publishing

Very weak diversification

The 3 months correlation between Tae and Samsung is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Tae Kyung Chemical and Samsung Publishing Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung Publishing and Tae Kyung 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 Tae Kyung Chemical are associated (or correlated) with Samsung Publishing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samsung Publishing has no effect on the direction of Tae Kyung i.e., Tae Kyung and Samsung Publishing go up and down completely randomly.

Pair Corralation between Tae Kyung and Samsung Publishing

Assuming the 90 days trading horizon Tae Kyung Chemical is expected to under-perform the Samsung Publishing. But the stock apears to be less risky and, when comparing its historical volatility, Tae Kyung Chemical is 1.35 times less risky than Samsung Publishing. The stock trades about -0.04 of its potential returns per unit of risk. The Samsung Publishing Co is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  1,659,663  in Samsung Publishing Co on October 4, 2024 and sell it today you would lose (178,663) from holding Samsung Publishing Co or give up 10.77% of portfolio value over 90 days.

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

Tae Kyung Chemical  vs.  Samsung Publishing Co

Tae Kyung Chemical

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Tae Kyung Chemical are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Tae Kyung may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Samsung Publishing

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Samsung Publishing Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Samsung Publishing is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Tae Kyung and Samsung Publishing

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

The idea behind Tae Kyung Chemical and Samsung Publishing 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.