Correlation Between Iljin Materials and Samick Musical

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

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

Diversification Opportunities for Iljin Materials and Samick Musical

-0.03

Correlation Coefficient

Iljin Materials  Samick Musical

Good diversification

The 3 months correlation between Iljin and Samick is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Iljin Materials 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 Iljin Materials 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 Iljin Materials 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 Iljin Materials i.e., Iljin Materials and Samick Musical go up and down completely randomly.

Pair Corralation between Iljin Materials and Samick Musical

Assuming the 90 days trading horizon Iljin Materials Co is expected to generate 0.93 times more return on investment than Samick Musical. However, Iljin Materials Co is 1.07 times less risky than Samick Musical. It trades about 0.03 of its potential returns per unit of risk. Samick Musical Instruments is currently generating about 0.0 per unit of risk. If you would invest  2,360,000  in Iljin Materials Co on December 30, 2024 and sell it today you would earn a total of  45,000  from holding Iljin Materials Co or generate 1.91% return on investment over 90 days.

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

Iljin Materials Co  vs.  Samick Musical Instruments

Iljin Materials

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Iljin Materials Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Iljin Materials is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Samick Musical Instr

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Iljin Materials and Samick Musical

The main advantage of trading using opposite Iljin Materials and Samick Musical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iljin Materials 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 Iljin Materials 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.