Correlation Between Samsung Card and Shinsegae Food

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

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

Diversification Opportunities for Samsung Card and Shinsegae Food

-0.02

Correlation Coefficient

Samsung Card  Shinsegae Food

Good diversification

The 3 months correlation between Samsung and Shinsegae is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Card Co and Shinsegae Food in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shinsegae Food and Samsung Card 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 Card Co are associated (or correlated) with Shinsegae Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shinsegae Food has no effect on the direction of Samsung Card i.e., Samsung Card and Shinsegae Food go up and down completely randomly.

Pair Corralation between Samsung Card and Shinsegae Food

Assuming the 90 days trading horizon Samsung Card Co is expected to under-perform the Shinsegae Food. But the stock apears to be less risky and, when comparing its historical volatility, Samsung Card Co is 1.32 times less risky than Shinsegae Food. The stock trades about -0.15 of its potential returns per unit of risk. The Shinsegae Food is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  3,280,000  in Shinsegae Food on September 23, 2024 and sell it today you would lose (80,000) from holding Shinsegae Food or give up 2.44% of portfolio value over 90 days.

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

Samsung Card Co  vs.  Shinsegae Food

Samsung Card

Risk-Adjusted Performance

0 of 100

Very Weak

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

Shinsegae Food

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shinsegae Food 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 Card and Shinsegae Food

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

The idea behind Samsung Card Co and Shinsegae Food 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.