Correlation Between Ssangyong Information and Namyang Dairy

Can any of the company-specific risk be diversified away by investing in both Ssangyong Information and Namyang Dairy 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 Ssangyong Information and Namyang Dairy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ssangyong Information Communication and Namyang Dairy Products, you can compare the effects of market volatilities on Ssangyong Information and Namyang Dairy 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 Ssangyong Information with a short position of Namyang Dairy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ssangyong Information and Namyang Dairy.

Diversification Opportunities for Ssangyong Information and Namyang Dairy

0.18

Correlation Coefficient

Ssangyong Information  Namyang Dairy

Average diversification

The 3 months correlation between Ssangyong and Namyang is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Ssangyong Information Communic and Namyang Dairy Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Namyang Dairy Products and Ssangyong Information 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 Ssangyong Information Communication are associated (or correlated) with Namyang Dairy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Namyang Dairy Products has no effect on the direction of Ssangyong Information i.e., Ssangyong Information and Namyang Dairy go up and down completely randomly.

Pair Corralation between Ssangyong Information and Namyang Dairy

Assuming the 90 days trading horizon Ssangyong Information Communication is expected to generate 0.63 times more return on investment than Namyang Dairy. However, Ssangyong Information Communication is 1.58 times less risky than Namyang Dairy. It trades about 0.08 of its potential returns per unit of risk. Namyang Dairy Products is currently generating about -0.08 per unit of risk. If you would invest  62,900  in Ssangyong Information Communication on September 20, 2024 and sell it today you would earn a total of  2,100  from holding Ssangyong Information Communication or generate 3.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Ssangyong Information Communic  vs.  Namyang Dairy Products

Ssangyong Information

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ssangyong Information Communication are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Ssangyong Information is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Namyang Dairy Products

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Namyang Dairy Products are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Namyang Dairy sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ssangyong Information and Namyang Dairy

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

The idea behind Ssangyong Information Communication and Namyang Dairy Products 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.