Correlation Between Daiyang Metal and Samick Musical

Can any of the company-specific risk be diversified away by investing in both Daiyang Metal and Samick Musical 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 Daiyang Metal and Samick Musical into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Daiyang Metal Co and Samick Musical Instruments, you can compare the effects of market volatilities on Daiyang Metal and Samick Musical 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 Daiyang Metal with a short position of Samick Musical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daiyang Metal and Samick Musical.

Diversification Opportunities for Daiyang Metal and Samick Musical

-0.13

Correlation Coefficient

Daiyang Metal  Samick Musical

Good diversification

The 3 months correlation between Daiyang and Samick is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Daiyang Metal Co and Samick Musical Instruments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samick Musical Instr and Daiyang Metal 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 Daiyang Metal Co are associated (or correlated) with Samick Musical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samick Musical Instr has no effect on the direction of Daiyang Metal i.e., Daiyang Metal and Samick Musical go up and down completely randomly.

Pair Corralation between Daiyang Metal and Samick Musical

Assuming the 90 days trading horizon Daiyang Metal Co is expected to under-perform the Samick Musical. In addition to that, Daiyang Metal is 1.93 times more volatile than Samick Musical Instruments. It trades about -0.04 of its total potential returns per unit of risk. Samick Musical Instruments is currently generating about 0.14 per unit of volatility. If you would invest  103,817  in Samick Musical Instruments on October 7, 2024 and sell it today you would earn a total of  13,383  from holding Samick Musical Instruments or generate 12.89% return on investment over 90 days.

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

Daiyang Metal Co  vs.  Samick Musical Instruments

Daiyang Metal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Daiyang Metal Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Samick Musical Instr

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Samick Musical Instruments are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Samick Musical sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Daiyang Metal and Samick Musical

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

The idea behind Daiyang Metal Co and Samick Musical Instruments 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.