Correlation Between Samji Electronics and Design

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

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

Diversification Opportunities for Samji Electronics and Design

0.03

Correlation Coefficient

Samji Electronics  Design

Significant diversification

The 3 months correlation between Samji and Design is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Samji Electronics Co and Design Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Design and Samji Electronics 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 Samji Electronics Co are associated (or correlated) with Design. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Design has no effect on the direction of Samji Electronics i.e., Samji Electronics and Design go up and down completely randomly.

Pair Corralation between Samji Electronics and Design

Assuming the 90 days trading horizon Samji Electronics Co is expected to generate 0.16 times more return on investment than Design. However, Samji Electronics Co is 6.32 times less risky than Design. It trades about -0.03 of its potential returns per unit of risk. Design Co is currently generating about -0.17 per unit of risk. If you would invest  872,000  in Samji Electronics Co on October 7, 2024 and sell it today you would lose (20,000) from holding Samji Electronics Co or give up 2.29% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.16%
Values	Daily Returns

Samji Electronics Co  vs.  Design Co

Samji Electronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Samji Electronics Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Samji Electronics is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Design

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Design Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Samji Electronics and Design

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

The idea behind Samji Electronics Co and Design 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 Anywhere module to track or share privately all of your investments from the convenience of any device.