Correlation Between Total Soft and Samyoung Electronics

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

Diversification Opportunities for Total Soft and Samyoung Electronics

0.38

Correlation Coefficient

Total Soft  Samyoung Electronics

Weak diversification

The 3 months correlation between Total and Samyoung is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Total Soft Bank and Samyoung Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samyoung Electronics 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 Samyoung Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samyoung Electronics has no effect on the direction of Total Soft i.e., Total Soft and Samyoung Electronics go up and down completely randomly.

Pair Corralation between Total Soft and Samyoung Electronics

Assuming the 90 days trading horizon Total Soft is expected to generate 2.75 times less return on investment than Samyoung Electronics. In addition to that, Total Soft is 3.21 times more volatile than Samyoung Electronics Co. It trades about 0.02 of its total potential returns per unit of risk. Samyoung Electronics Co is currently generating about 0.17 per unit of volatility. If you would invest  879,000  in Samyoung Electronics Co on September 2, 2024 and sell it today you would earn a total of  127,000  from holding Samyoung Electronics Co or generate 14.45% return on investment over 90 days.

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

Total Soft Bank  vs.  Samyoung Electronics Co

Total Soft Bank

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Total Soft Bank are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Total Soft is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Samyoung Electronics

Risk-Adjusted Performance

13 of 100

Good

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

Pair Trading with Total Soft and Samyoung Electronics

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

The idea behind Total Soft Bank and Samyoung Electronics 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.