Correlation Between Samhyun Steel and Cheryong Electric

Can any of the company-specific risk be diversified away by investing in both Samhyun Steel and Cheryong Electric 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 Samhyun Steel and Cheryong Electric into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Samhyun Steel Co and Cheryong Electric CoLtd, you can compare the effects of market volatilities on Samhyun Steel and Cheryong Electric 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 Samhyun Steel with a short position of Cheryong Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samhyun Steel and Cheryong Electric.

Diversification Opportunities for Samhyun Steel and Cheryong Electric

0.33

Correlation Coefficient

Samhyun Steel  Cheryong Electric

Weak diversification

The 3 months correlation between Samhyun and Cheryong is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Samhyun Steel Co and Cheryong Electric CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cheryong Electric CoLtd and Samhyun Steel 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 Samhyun Steel Co are associated (or correlated) with Cheryong Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cheryong Electric CoLtd has no effect on the direction of Samhyun Steel i.e., Samhyun Steel and Cheryong Electric go up and down completely randomly.

Pair Corralation between Samhyun Steel and Cheryong Electric

Assuming the 90 days trading horizon Samhyun Steel Co is expected to under-perform the Cheryong Electric. But the stock apears to be less risky and, when comparing its historical volatility, Samhyun Steel Co is 3.35 times less risky than Cheryong Electric. The stock trades about -0.01 of its potential returns per unit of risk. The Cheryong Electric CoLtd is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,604,879  in Cheryong Electric CoLtd on October 24, 2024 and sell it today you would earn a total of  4,245,121  from holding Cheryong Electric CoLtd or generate 264.51% return on investment over 90 days.

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

Samhyun Steel Co  vs.  Cheryong Electric CoLtd

Samhyun Steel

Risk-Adjusted Performance

0 of 100

Very Weak

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

Cheryong Electric CoLtd

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cheryong Electric CoLtd are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Cheryong Electric may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Samhyun Steel and Cheryong Electric

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

The idea behind Samhyun Steel Co and Cheryong Electric CoLtd 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.