Correlation Between Samsung Publishing and Tae Kyung

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

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

Diversification Opportunities for Samsung Publishing and Tae Kyung

0.64

Correlation Coefficient

Samsung Publishing  Tae Kyung

Poor diversification

The 3 months correlation between Samsung and Tae is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Publishing Co and Tae Kyung Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tae Kyung Chemical and Samsung Publishing 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 Publishing Co are associated (or correlated) with Tae Kyung. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tae Kyung Chemical has no effect on the direction of Samsung Publishing i.e., Samsung Publishing and Tae Kyung go up and down completely randomly.

Pair Corralation between Samsung Publishing and Tae Kyung

Assuming the 90 days trading horizon Samsung Publishing is expected to generate 2.6 times less return on investment than Tae Kyung. In addition to that, Samsung Publishing is 1.64 times more volatile than Tae Kyung Chemical. It trades about 0.05 of its total potential returns per unit of risk. Tae Kyung Chemical is currently generating about 0.23 per unit of volatility. If you would invest  1,023,606  in Tae Kyung Chemical on October 11, 2024 and sell it today you would earn a total of  81,394  from holding Tae Kyung Chemical or generate 7.95% return on investment over 90 days.

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

Samsung Publishing Co  vs.  Tae Kyung Chemical

Samsung Publishing

Risk-Adjusted Performance

0 of 100

Very Weak

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

Tae Kyung Chemical

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Samsung Publishing and Tae Kyung

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

The idea behind Samsung Publishing Co and Tae Kyung Chemical 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.