Correlation Between Samsung Life and SillaJen

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

Diversification Opportunities for Samsung Life and SillaJen

0.46

Correlation Coefficient

Samsung Life  SillaJen

Very weak diversification

The 3 months correlation between Samsung and SillaJen is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Life Insurance and SillaJen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SillaJen 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 SillaJen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SillaJen has no effect on the direction of Samsung Life i.e., Samsung Life and SillaJen go up and down completely randomly.

Pair Corralation between Samsung Life and SillaJen

Assuming the 90 days trading horizon Samsung Life Insurance is expected to under-perform the SillaJen. In addition to that, Samsung Life is 1.47 times more volatile than SillaJen. It trades about -0.07 of its total potential returns per unit of risk. SillaJen is currently generating about -0.07 per unit of volatility. If you would invest  250,500  in SillaJen on December 26, 2024 and sell it today you would lose (20,000) from holding SillaJen or give up 7.98% 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.  SillaJen

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.

SillaJen

Risk-Adjusted Performance

Very Weak

Over the last 90 days SillaJen 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 SillaJen

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

The idea behind Samsung Life Insurance and SillaJen 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.