Correlation Between Samsung Life and Ecopro Co

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

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

Diversification Opportunities for Samsung Life and Ecopro Co

0.58

Correlation Coefficient

Samsung Life  Ecopro Co

Very weak diversification

The 3 months correlation between Samsung and Ecopro is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Life and Ecopro Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecopro Co and Samsung Life 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 Life are associated (or correlated) with Ecopro Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecopro Co has no effect on the direction of Samsung Life i.e., Samsung Life and Ecopro Co go up and down completely randomly.

Pair Corralation between Samsung Life and Ecopro Co

Assuming the 90 days trading horizon Samsung Life is expected to under-perform the Ecopro Co. But the stock apears to be less risky and, when comparing its historical volatility, Samsung Life is 1.1 times less risky than Ecopro Co. The stock trades about -0.06 of its potential returns per unit of risk. The Ecopro Co is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  7,460,785  in Ecopro Co on November 29, 2024 and sell it today you would lose (870,785) from holding Ecopro Co or give up 11.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.28%
Values	Daily Returns

Samsung Life  vs.  Ecopro Co

Samsung Life

Risk-Adjusted Performance

Very Weak

Over the last 90 days Samsung Life 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.

Ecopro Co

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ecopro Co 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 Life and Ecopro Co

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

The idea behind Samsung Life and Ecopro 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.