Correlation Between Daihan Pharmaceutical and Sam A

Can any of the company-specific risk be diversified away by investing in both Daihan Pharmaceutical and Sam A 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 Daihan Pharmaceutical and Sam A into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Daihan Pharmaceutical and Sam A

-0.61

Correlation Coefficient

Daihan Pharmaceutical  Sam A

Excellent diversification

The 3 months correlation between Daihan and Sam is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Daihan Pharmaceutical CoLtd and Sam A Pharm Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sam A Pharm and Daihan Pharmaceutical 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 Daihan Pharmaceutical CoLtd are associated (or correlated) with Sam A. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sam A Pharm has no effect on the direction of Daihan Pharmaceutical i.e., Daihan Pharmaceutical and Sam A go up and down completely randomly.

Pair Corralation between Daihan Pharmaceutical and Sam A

Assuming the 90 days trading horizon Daihan Pharmaceutical CoLtd is expected to under-perform the Sam A. But the stock apears to be less risky and, when comparing its historical volatility, Daihan Pharmaceutical CoLtd is 2.95 times less risky than Sam A. The stock trades about -0.01 of its potential returns per unit of risk. The Sam A Pharm Co is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,497,906  in Sam A Pharm Co on October 9, 2024 and sell it today you would earn a total of  253,094  from holding Sam A Pharm Co or generate 16.9% return on investment over 90 days.

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

Daihan Pharmaceutical CoLtd  vs.  Sam A Pharm Co

Daihan Pharmaceutical

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Daihan Pharmaceutical CoLtd are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Daihan Pharmaceutical is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Sam A Pharm

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sam A Pharm 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 February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Daihan Pharmaceutical and Sam A

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

The idea behind Daihan Pharmaceutical CoLtd and Sam A Pharm 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.