Correlation Between Miwon Chemicals and Samlip General

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

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

Diversification Opportunities for Miwon Chemicals and Samlip General

0.68

Correlation Coefficient

Miwon Chemicals  Samlip General

Poor diversification

The 3 months correlation between Miwon and Samlip is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Miwon Chemicals Co and Samlip General Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samlip General Foods and Miwon Chemicals 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 Miwon Chemicals Co are associated (or correlated) with Samlip General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samlip General Foods has no effect on the direction of Miwon Chemicals i.e., Miwon Chemicals and Samlip General go up and down completely randomly.

Pair Corralation between Miwon Chemicals and Samlip General

Assuming the 90 days trading horizon Miwon Chemicals is expected to generate 4.82 times less return on investment than Samlip General. But when comparing it to its historical volatility, Miwon Chemicals Co is 1.54 times less risky than Samlip General. It trades about 0.19 of its potential returns per unit of risk. Samlip General Foods is currently generating about 0.6 of returns per unit of risk over similar time horizon. If you would invest  4,370,214  in Samlip General Foods on October 10, 2024 and sell it today you would earn a total of  1,059,786  from holding Samlip General Foods or generate 24.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.0%
Values	Daily Returns

Miwon Chemicals Co  vs.  Samlip General Foods

Miwon Chemicals

Risk-Adjusted Performance

3 of 100

Insignificant

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

Samlip General Foods

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Samlip General Foods are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Samlip General may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Miwon Chemicals and Samlip General

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

The idea behind Miwon Chemicals Co and Samlip General 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.

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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.