Correlation Between SV Investment and Samsung Special

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

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

Diversification Opportunities for SV Investment and Samsung Special

0.38

Correlation Coefficient

SV Investment  Samsung Special

Weak diversification

The 3 months correlation between 289080 and Samsung is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding SV Investment and Samsung Special Purpose in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung Special Purpose and SV Investment 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 SV Investment are associated (or correlated) with Samsung Special. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samsung Special Purpose has no effect on the direction of SV Investment i.e., SV Investment and Samsung Special go up and down completely randomly.

Pair Corralation between SV Investment and Samsung Special

Assuming the 90 days trading horizon SV Investment is expected to under-perform the Samsung Special. But the stock apears to be less risky and, when comparing its historical volatility, SV Investment is 1.7 times less risky than Samsung Special. The stock trades about -0.17 of its potential returns per unit of risk. The Samsung Special Purpose is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  208,500  in Samsung Special Purpose on September 8, 2024 and sell it today you would lose (15,400) from holding Samsung Special Purpose or give up 7.39% of portfolio value over 90 days.

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

SV Investment  vs.  Samsung Special Purpose

SV Investment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SV Investment 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 January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Samsung Special Purpose

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with SV Investment and Samsung Special

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

The idea behind SV Investment and Samsung Special Purpose 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.