Correlation Between MS Autotech and Samsung SDI

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

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

Diversification Opportunities for MS Autotech and Samsung SDI

0.32

Correlation Coefficient

MS Autotech  Samsung SDI

Weak diversification

The 3 months correlation between 123040 and Samsung is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding MS Autotech CoLtd and Samsung SDI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung SDI and MS Autotech 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 MS Autotech CoLtd are associated (or correlated) with Samsung SDI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samsung SDI has no effect on the direction of MS Autotech i.e., MS Autotech and Samsung SDI go up and down completely randomly.

Pair Corralation between MS Autotech and Samsung SDI

Assuming the 90 days trading horizon MS Autotech CoLtd is expected to generate 1.31 times more return on investment than Samsung SDI. However, MS Autotech is 1.31 times more volatile than Samsung SDI. It trades about 0.05 of its potential returns per unit of risk. Samsung SDI is currently generating about -0.06 per unit of risk. If you would invest  262,500  in MS Autotech CoLtd on November 28, 2024 and sell it today you would earn a total of  19,500  from holding MS Autotech CoLtd or generate 7.43% return on investment over 90 days.

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

MS Autotech CoLtd  vs.  Samsung SDI

MS Autotech CoLtd

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in MS Autotech CoLtd are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, MS Autotech may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Samsung SDI

Risk-Adjusted Performance

Very Weak

Over the last 90 days Samsung SDI has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with MS Autotech and Samsung SDI

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

The idea behind MS Autotech CoLtd and Samsung SDI 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..