Correlation Between Innowireless and Sam Yang

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

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

Diversification Opportunities for Innowireless and Sam Yang

0.75

Correlation Coefficient

Innowireless  Sam Yang

Poor diversification

The 3 months correlation between Innowireless and Sam is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Innowireless Co 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 Innowireless 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 Innowireless Co 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 Innowireless i.e., Innowireless and Sam Yang go up and down completely randomly.

Pair Corralation between Innowireless and Sam Yang

Assuming the 90 days trading horizon Innowireless is expected to generate 2.64 times less return on investment than Sam Yang. But when comparing it to its historical volatility, Innowireless Co is 1.47 times less risky than Sam Yang. It trades about 0.2 of its potential returns per unit of risk. Sam Yang Foods is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest  53,500,000  in Sam Yang Foods on September 20, 2024 and sell it today you would earn a total of  17,200,000  from holding Sam Yang Foods or generate 32.15% return on investment over 90 days.

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

Innowireless Co  vs.  Sam Yang Foods

Innowireless

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Innowireless Co are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Innowireless 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 Innowireless and Sam Yang

The main advantage of trading using opposite Innowireless and Sam Yang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innowireless 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 Innowireless Co 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.