Correlation Between EV Advanced and Samsung CT

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

By analyzing existing cross correlation between EV Advanced Material and Samsung CT Corp, you can compare the effects of market volatilities on EV Advanced and Samsung CT 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 EV Advanced with a short position of Samsung CT. Check out your portfolio center. Please also check ongoing floating volatility patterns of EV Advanced and Samsung CT.

Diversification Opportunities for EV Advanced and Samsung CT

0.54

Correlation Coefficient

EV Advanced  Samsung CT

Very weak diversification

The 3 months correlation between 131400 and Samsung is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding EV Advanced Material and Samsung CT Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung CT Corp and EV Advanced 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 EV Advanced Material are associated (or correlated) with Samsung CT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samsung CT Corp has no effect on the direction of EV Advanced i.e., EV Advanced and Samsung CT go up and down completely randomly.

Pair Corralation between EV Advanced and Samsung CT

Assuming the 90 days trading horizon EV Advanced Material is expected to generate 3.1 times more return on investment than Samsung CT. However, EV Advanced is 3.1 times more volatile than Samsung CT Corp. It trades about 0.03 of its potential returns per unit of risk. Samsung CT Corp is currently generating about 0.03 per unit of risk. If you would invest  165,800  in EV Advanced Material on December 4, 2024 and sell it today you would earn a total of  25,900  from holding EV Advanced Material or generate 15.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.79%
Values	Daily Returns

EV Advanced Material  vs.  Samsung CT Corp

EV Advanced Material

Risk-Adjusted Performance

Very Weak

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

Samsung CT Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Samsung CT Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Samsung CT is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with EV Advanced and Samsung CT

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

The idea behind EV Advanced Material and Samsung CT Corp 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.