Correlation Between Total Soft and Sam Yang

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

By analyzing existing cross correlation between Total Soft Bank and Sam Yang Foods, you can compare the effects of market volatilities on Total Soft and Sam Yang 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 Total Soft with a short position of Sam Yang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Total Soft and Sam Yang.

Diversification Opportunities for Total Soft and Sam Yang

0.83

Correlation Coefficient

Total Soft  Sam Yang

Very poor diversification

The 3 months correlation between Total and Sam is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Total Soft Bank and Sam Yang Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sam Yang Foods and Total Soft 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 Total Soft Bank are associated (or correlated) with Sam Yang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sam Yang Foods has no effect on the direction of Total Soft i.e., Total Soft and Sam Yang go up and down completely randomly.

Pair Corralation between Total Soft and Sam Yang

Assuming the 90 days trading horizon Total Soft is expected to generate 1.29 times less return on investment than Sam Yang. In addition to that, Total Soft is 1.28 times more volatile than Sam Yang Foods. It trades about 0.09 of its total potential returns per unit of risk. Sam Yang Foods is currently generating about 0.14 per unit of volatility. If you would invest  20,881,700  in Sam Yang Foods on October 5, 2024 and sell it today you would earn a total of  53,018,300  from holding Sam Yang Foods or generate 253.9% return on investment over 90 days.

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

Total Soft Bank  vs.  Sam Yang Foods

Total Soft Bank

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Total Soft Bank are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Total Soft sustained solid returns over the last few months and may actually be approaching a breakup point.

Sam Yang Foods

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sam Yang Foods are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Sam Yang sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Total Soft and Sam Yang

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

The idea behind Total Soft Bank and Sam Yang Foods 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.