Correlation Between Koh Young and Samsung Securities

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

By analyzing existing cross correlation between Koh Young Technology and Samsung Securities, you can compare the effects of market volatilities on Koh Young and Samsung Securities 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 Koh Young with a short position of Samsung Securities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Koh Young and Samsung Securities.

Diversification Opportunities for Koh Young and Samsung Securities

0.8

Correlation Coefficient

Koh Young  Samsung Securities

Very poor diversification

The 3 months correlation between Koh and Samsung is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Koh Young Technology and Samsung Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung Securities and Koh Young 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 Koh Young Technology are associated (or correlated) with Samsung Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samsung Securities has no effect on the direction of Koh Young i.e., Koh Young and Samsung Securities go up and down completely randomly.

Pair Corralation between Koh Young and Samsung Securities

Assuming the 90 days trading horizon Koh Young Technology is expected to generate 3.09 times more return on investment than Samsung Securities. However, Koh Young is 3.09 times more volatile than Samsung Securities. It trades about 0.27 of its potential returns per unit of risk. Samsung Securities is currently generating about 0.04 per unit of risk. If you would invest  798,000  in Koh Young Technology on November 30, 2024 and sell it today you would earn a total of  953,000  from holding Koh Young Technology or generate 119.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.28%
Values	Daily Returns

Koh Young Technology  vs.  Samsung Securities

Koh Young Technology

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Koh Young Technology are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Koh Young sustained solid returns over the last few months and may actually be approaching a breakup point.

Samsung Securities

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Samsung Securities are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Samsung Securities is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Koh Young and Samsung Securities

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

The idea behind Koh Young Technology and Samsung Securities 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.