Correlation Between Samsung Life and Neungyule Education

Can any of the company-specific risk be diversified away by investing in both Samsung Life and Neungyule Education 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 Neungyule Education 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 Neungyule Education, you can compare the effects of market volatilities on Samsung Life and Neungyule Education 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 Neungyule Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Life and Neungyule Education.

Diversification Opportunities for Samsung Life and Neungyule Education

-0.18

Correlation Coefficient

Samsung Life  Neungyule Education

Good diversification

The 3 months correlation between Samsung and Neungyule is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Life Insurance and Neungyule Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neungyule Education 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 Neungyule Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neungyule Education has no effect on the direction of Samsung Life i.e., Samsung Life and Neungyule Education go up and down completely randomly.

Pair Corralation between Samsung Life and Neungyule Education

Assuming the 90 days trading horizon Samsung Life is expected to generate 2.3 times less return on investment than Neungyule Education. But when comparing it to its historical volatility, Samsung Life Insurance is 1.39 times less risky than Neungyule Education. It trades about 0.04 of its potential returns per unit of risk. Neungyule Education is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  350,500  in Neungyule Education on September 13, 2024 and sell it today you would earn a total of  36,500  from holding Neungyule Education or generate 10.41% return on investment over 90 days.

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

Samsung Life Insurance  vs.  Neungyule Education

Samsung Life Insurance

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Samsung Life Insurance are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Samsung Life may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Neungyule Education

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Neungyule Education are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Neungyule Education sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Samsung Life and Neungyule Education

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

The idea behind Samsung Life Insurance and Neungyule Education 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.