Correlation Between Daewoo SBI and Samsung Publishing

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

By analyzing existing cross correlation between Daewoo SBI SPAC and Samsung Publishing Co, you can compare the effects of market volatilities on Daewoo SBI and Samsung Publishing 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 Daewoo SBI with a short position of Samsung Publishing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daewoo SBI and Samsung Publishing.

Diversification Opportunities for Daewoo SBI and Samsung Publishing

0.61

Correlation Coefficient

Daewoo SBI  Samsung Publishing

Poor diversification

The 3 months correlation between Daewoo and Samsung is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Daewoo SBI SPAC and Samsung Publishing Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung Publishing and Daewoo SBI 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 Daewoo SBI SPAC are associated (or correlated) with Samsung Publishing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samsung Publishing has no effect on the direction of Daewoo SBI i.e., Daewoo SBI and Samsung Publishing go up and down completely randomly.

Pair Corralation between Daewoo SBI and Samsung Publishing

Assuming the 90 days trading horizon Daewoo SBI SPAC is expected to under-perform the Samsung Publishing. But the stock apears to be less risky and, when comparing its historical volatility, Daewoo SBI SPAC is 2.09 times less risky than Samsung Publishing. The stock trades about -0.18 of its potential returns per unit of risk. The Samsung Publishing Co is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  1,546,000  in Samsung Publishing Co on August 31, 2024 and sell it today you would lose (112,000) from holding Samsung Publishing Co or give up 7.24% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Daewoo SBI SPAC  vs.  Samsung Publishing Co

Daewoo SBI SPAC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Daewoo SBI SPAC 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 December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Samsung Publishing

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Daewoo SBI and Samsung Publishing

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

The idea behind Daewoo SBI SPAC and Samsung Publishing Co 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.