Correlation Between Korea Alcohol and Samsung SDI

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

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

Diversification Opportunities for Korea Alcohol and Samsung SDI

-0.66

Correlation Coefficient

Korea Alcohol  Samsung SDI

Excellent diversification

The 3 months correlation between Korea and Samsung is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Korea Alcohol Industrial and Samsung SDI Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung SDI and Korea Alcohol 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 Korea Alcohol Industrial are associated (or correlated) with Samsung SDI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samsung SDI has no effect on the direction of Korea Alcohol i.e., Korea Alcohol and Samsung SDI go up and down completely randomly.

Pair Corralation between Korea Alcohol and Samsung SDI

Assuming the 90 days trading horizon Korea Alcohol Industrial is expected to generate 0.42 times more return on investment than Samsung SDI. However, Korea Alcohol Industrial is 2.41 times less risky than Samsung SDI. It trades about 0.24 of its potential returns per unit of risk. Samsung SDI Co is currently generating about -0.15 per unit of risk. If you would invest  805,636  in Korea Alcohol Industrial on December 24, 2024 and sell it today you would earn a total of  114,364  from holding Korea Alcohol Industrial or generate 14.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.28%
Values	Daily Returns

Korea Alcohol Industrial  vs.  Samsung SDI Co

Korea Alcohol Industrial

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Korea Alcohol Industrial are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Korea Alcohol sustained solid returns over the last few months and may actually be approaching a breakup point.

Samsung SDI

Risk-Adjusted Performance

Very Weak

Over the last 90 days Samsung SDI Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Korea Alcohol and Samsung SDI

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

The idea behind Korea Alcohol Industrial and Samsung SDI 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.

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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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.