Correlation Between Samsung CT and Ni Steel

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

By analyzing existing cross correlation between Samsung CT Corp and Ni Steel, you can compare the effects of market volatilities on Samsung CT and Ni Steel 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 Samsung CT with a short position of Ni Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung CT and Ni Steel.

Diversification Opportunities for Samsung CT and Ni Steel

0.57

Correlation Coefficient

Samsung CT  Ni Steel

Very weak diversification

The 3 months correlation between Samsung and 008260 is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Samsung CT Corp and Ni Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ni Steel and Samsung CT 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 Samsung CT Corp are associated (or correlated) with Ni Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ni Steel has no effect on the direction of Samsung CT i.e., Samsung CT and Ni Steel go up and down completely randomly.

Pair Corralation between Samsung CT and Ni Steel

Assuming the 90 days trading horizon Samsung CT Corp is expected to under-perform the Ni Steel. In addition to that, Samsung CT is 1.0 times more volatile than Ni Steel. It trades about -0.19 of its total potential returns per unit of risk. Ni Steel is currently generating about -0.06 per unit of volatility. If you would invest  404,000  in Ni Steel on September 3, 2024 and sell it today you would lose (38,500) from holding Ni Steel or give up 9.53% of portfolio value over 90 days.

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

Samsung CT Corp  vs.  Ni Steel

Samsung CT Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Samsung CT Corp 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 January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Ni Steel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ni Steel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Samsung CT and Ni Steel

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

The idea behind Samsung CT Corp and Ni Steel 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.

Check out your portfolio center.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.