Correlation Between PlayD and Samsung Life

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

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

Diversification Opportunities for PlayD and Samsung Life

0.33

Correlation Coefficient

PlayD  Samsung Life

Weak diversification

The 3 months correlation between PlayD and Samsung is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding PlayD Co and Samsung Life Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung Life Insurance and PlayD 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 PlayD Co are associated (or correlated) with Samsung Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samsung Life Insurance has no effect on the direction of PlayD i.e., PlayD and Samsung Life go up and down completely randomly.

Pair Corralation between PlayD and Samsung Life

Assuming the 90 days trading horizon PlayD Co is expected to generate 2.29 times more return on investment than Samsung Life. However, PlayD is 2.29 times more volatile than Samsung Life Insurance. It trades about 0.02 of its potential returns per unit of risk. Samsung Life Insurance is currently generating about 0.04 per unit of risk. If you would invest  590,000  in PlayD Co on October 11, 2024 and sell it today you would earn a total of  5,000  from holding PlayD Co or generate 0.85% return on investment over 90 days.

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

PlayD Co  vs.  Samsung Life Insurance

PlayD

Risk-Adjusted Performance

2 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PlayD Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, PlayD may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Samsung Life Insurance

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with PlayD and Samsung Life

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

The idea behind PlayD Co and Samsung Life Insurance 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.