Correlation Between Daishin Information and Samick Musical

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

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

Diversification Opportunities for Daishin Information and Samick Musical

0.79

Correlation Coefficient

Daishin Information  Samick Musical

Poor diversification

The 3 months correlation between Daishin and Samick is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Daishin Information Communicat 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 Daishin 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 Daishin Information Communications 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 Daishin Information i.e., Daishin Information and Samick Musical go up and down completely randomly.

Pair Corralation between Daishin Information and Samick Musical

Assuming the 90 days trading horizon Daishin Information Communications is expected to generate 2.99 times more return on investment than Samick Musical. However, Daishin Information is 2.99 times more volatile than Samick Musical Instruments. It trades about 0.08 of its potential returns per unit of risk. Samick Musical Instruments is currently generating about 0.14 per unit of risk. If you would invest  89,700  in Daishin Information Communications on October 20, 2024 and sell it today you would earn a total of  16,300  from holding Daishin Information Communications or generate 18.17% return on investment over 90 days.

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

Daishin Information Communicat  vs.  Samick Musical Instruments

Daishin Information

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Daishin Information Communications are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Daishin Information sustained solid returns over the last few months and may actually be approaching a breakup point.

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 Daishin Information and Samick Musical

The main advantage of trading using opposite Daishin Information and Samick Musical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daishin Information 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 Daishin Information Communications 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.