Correlation Between Alton Sports and Samsung SDI

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

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

Diversification Opportunities for Alton Sports and Samsung SDI

-0.45

Correlation Coefficient

Alton Sports  Samsung SDI

Very good diversification

The 3 months correlation between Alton and Samsung is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Alton Sports CoLtd and Samsung SDI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung SDI and Alton Sports 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 Alton Sports 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 Alton Sports i.e., Alton Sports and Samsung SDI go up and down completely randomly.

Pair Corralation between Alton Sports and Samsung SDI

Assuming the 90 days trading horizon Alton Sports CoLtd is expected to generate 0.68 times more return on investment than Samsung SDI. However, Alton Sports CoLtd is 1.46 times less risky than Samsung SDI. It trades about 0.01 of its potential returns per unit of risk. Samsung SDI is currently generating about -0.13 per unit of risk. If you would invest  143,000  in Alton Sports CoLtd on December 24, 2024 and sell it today you would lose (600.00) from holding Alton Sports CoLtd or give up 0.42% of portfolio value over 90 days.

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

Alton Sports CoLtd  vs.  Samsung SDI

Alton Sports CoLtd

Risk-Adjusted Performance

Weak

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

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 weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Alton Sports and Samsung SDI

The main advantage of trading using opposite Alton Sports and Samsung SDI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alton Sports 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 Alton Sports 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..