Correlation Between Samsung Publishing and Sungdo Engineering

Can any of the company-specific risk be diversified away by investing in both Samsung Publishing and Sungdo Engineering 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 Sungdo Engineering 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 Sungdo Engineering Construction, you can compare the effects of market volatilities on Samsung Publishing and Sungdo Engineering 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 Sungdo Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Publishing and Sungdo Engineering.

Diversification Opportunities for Samsung Publishing and Sungdo Engineering

0.51

Correlation Coefficient

Samsung Publishing  Sungdo Engineering

Very weak diversification

The 3 months correlation between Samsung and Sungdo is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Publishing Co and Sungdo Engineering Constructio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sungdo Engineering 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 Sungdo Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sungdo Engineering has no effect on the direction of Samsung Publishing i.e., Samsung Publishing and Sungdo Engineering go up and down completely randomly.

Pair Corralation between Samsung Publishing and Sungdo Engineering

Assuming the 90 days trading horizon Samsung Publishing Co is expected to generate 1.29 times more return on investment than Sungdo Engineering. However, Samsung Publishing is 1.29 times more volatile than Sungdo Engineering Construction. It trades about 0.09 of its potential returns per unit of risk. Sungdo Engineering Construction is currently generating about 0.04 per unit of risk. If you would invest  1,416,930  in Samsung Publishing Co on October 6, 2024 and sell it today you would earn a total of  152,070  from holding Samsung Publishing Co or generate 10.73% return on investment over 90 days.

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

Samsung Publishing Co  vs.  Sungdo Engineering Constructio

Samsung Publishing

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Samsung Publishing Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Samsung Publishing may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Sungdo Engineering

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sungdo Engineering Construction has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Sungdo Engineering 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 Sungdo Engineering

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

The idea behind Samsung Publishing Co and Sungdo Engineering Construction 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.