Correlation Between Eagon Industrial and Sam Yang

Can any of the company-specific risk be diversified away by investing in both Eagon Industrial and Sam Yang 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 Eagon Industrial and Sam Yang into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Eagon Industrial Co and Sam Yang Foods, you can compare the effects of market volatilities on Eagon Industrial and Sam Yang 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 Eagon Industrial with a short position of Sam Yang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eagon Industrial and Sam Yang.

Diversification Opportunities for Eagon Industrial and Sam Yang

-0.22

Correlation Coefficient

Eagon Industrial  Sam Yang

Very good diversification

The 3 months correlation between Eagon and Sam is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Eagon Industrial Co and Sam Yang Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sam Yang Foods and Eagon Industrial 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 Eagon Industrial Co are associated (or correlated) with Sam Yang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sam Yang Foods has no effect on the direction of Eagon Industrial i.e., Eagon Industrial and Sam Yang go up and down completely randomly.

Pair Corralation between Eagon Industrial and Sam Yang

Assuming the 90 days trading horizon Eagon Industrial is expected to generate 8.5 times less return on investment than Sam Yang. In addition to that, Eagon Industrial is 1.57 times more volatile than Sam Yang Foods. It trades about 0.01 of its total potential returns per unit of risk. Sam Yang Foods is currently generating about 0.12 per unit of volatility. If you would invest  75,744,000  in Sam Yang Foods on December 23, 2024 and sell it today you would earn a total of  15,956,000  from holding Sam Yang Foods or generate 21.07% return on investment over 90 days.

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

Eagon Industrial Co  vs.  Sam Yang Foods

Eagon Industrial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eagon Industrial Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Eagon Industrial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Sam Yang Foods

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sam Yang Foods are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Sam Yang sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eagon Industrial and Sam Yang

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

The idea behind Eagon Industrial Co and Sam Yang Foods 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.