Correlation Between KakaoBank Corp and Samsung Publishing

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

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

Diversification Opportunities for KakaoBank Corp and Samsung Publishing

0.38

Correlation Coefficient

KakaoBank Corp  Samsung Publishing

Weak diversification

The 3 months correlation between KakaoBank and Samsung is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding KakaoBank Corp and Samsung Publishing Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung Publishing and KakaoBank Corp 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 KakaoBank Corp 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 KakaoBank Corp i.e., KakaoBank Corp and Samsung Publishing go up and down completely randomly.

Pair Corralation between KakaoBank Corp and Samsung Publishing

Assuming the 90 days trading horizon KakaoBank Corp is expected to generate 0.56 times more return on investment than Samsung Publishing. However, KakaoBank Corp is 1.79 times less risky than Samsung Publishing. It trades about 0.13 of its potential returns per unit of risk. Samsung Publishing Co is currently generating about -0.01 per unit of risk. If you would invest  2,030,000  in KakaoBank Corp on September 4, 2024 and sell it today you would earn a total of  305,000  from holding KakaoBank Corp or generate 15.02% return on investment over 90 days.

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

KakaoBank Corp  vs.  Samsung Publishing Co

KakaoBank Corp

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in KakaoBank Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, KakaoBank Corp sustained solid returns over the last few months and may actually be approaching a breakup point.

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 KakaoBank Corp and Samsung Publishing

The main advantage of trading using opposite KakaoBank Corp and Samsung Publishing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KakaoBank Corp 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 KakaoBank Corp 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.