Correlation Between Haesung Industrial and Samsung Securities

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

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

Diversification Opportunities for Haesung Industrial and Samsung Securities

0.25

Correlation Coefficient

Haesung Industrial  Samsung Securities

Modest diversification

The 3 months correlation between Haesung and Samsung is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Haesung Industrial Co and Samsung Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung Securities and Haesung Industrial 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 Haesung Industrial Co are associated (or correlated) with Samsung Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samsung Securities has no effect on the direction of Haesung Industrial i.e., Haesung Industrial and Samsung Securities go up and down completely randomly.

Pair Corralation between Haesung Industrial and Samsung Securities

Assuming the 90 days trading horizon Haesung Industrial Co is expected to under-perform the Samsung Securities. But the stock apears to be less risky and, when comparing its historical volatility, Haesung Industrial Co is 1.06 times less risky than Samsung Securities. The stock trades about -0.08 of its potential returns per unit of risk. The Samsung Securities is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  4,745,000  in Samsung Securities on September 4, 2024 and sell it today you would earn a total of  325,000  from holding Samsung Securities or generate 6.85% return on investment over 90 days.

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

Haesung Industrial Co  vs.  Samsung Securities

Haesung Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Haesung Industrial 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.

Samsung Securities

Risk-Adjusted Performance

5 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Samsung Securities are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Samsung Securities may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Haesung Industrial and Samsung Securities

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

The idea behind Haesung Industrial Co and Samsung Securities 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..