Correlation Between Samsung Life and Ssangyong Materials

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

By analyzing existing cross correlation between Samsung Life Insurance and Ssangyong Materials Corp, you can compare the effects of market volatilities on Samsung Life and Ssangyong Materials 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 Ssangyong Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Life and Ssangyong Materials.

Diversification Opportunities for Samsung Life and Ssangyong Materials

0.44

Correlation Coefficient

Samsung Life  Ssangyong Materials

Very weak diversification

The 3 months correlation between Samsung and Ssangyong is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Life Insurance and Ssangyong Materials Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ssangyong Materials Corp 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 Insurance are associated (or correlated) with Ssangyong Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ssangyong Materials Corp has no effect on the direction of Samsung Life i.e., Samsung Life and Ssangyong Materials go up and down completely randomly.

Pair Corralation between Samsung Life and Ssangyong Materials

Assuming the 90 days trading horizon Samsung Life Insurance is expected to under-perform the Ssangyong Materials. In addition to that, Samsung Life is 1.0 times more volatile than Ssangyong Materials Corp. It trades about -0.07 of its total potential returns per unit of risk. Ssangyong Materials Corp is currently generating about -0.07 per unit of volatility. If you would invest  221,000  in Ssangyong Materials Corp on December 26, 2024 and sell it today you would lose (26,000) from holding Ssangyong Materials Corp or give up 11.76% of portfolio value over 90 days.

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

Samsung Life Insurance  vs.  Ssangyong Materials Corp

Samsung Life Insurance

Risk-Adjusted Performance

Very Weak

Over the last 90 days Samsung Life Insurance 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.

Ssangyong Materials Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ssangyong Materials Corp 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 Ssangyong Materials

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

The idea behind Samsung Life Insurance and Ssangyong Materials Corp 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.