Correlation Between Samsung KODEX and Solution Advanced

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

By analyzing existing cross correlation between Samsung KODEX TRF7030 and Solution Advanced Technology, you can compare the effects of market volatilities on Samsung KODEX and Solution Advanced 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 Samsung KODEX with a short position of Solution Advanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung KODEX and Solution Advanced.

Diversification Opportunities for Samsung KODEX and Solution Advanced

0.25

Correlation Coefficient

Samsung KODEX  Solution Advanced

Modest diversification

The 3 months correlation between Samsung and Solution is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Samsung KODEX TRF7030 and Solution Advanced Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solution Advanced and Samsung KODEX 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 Samsung KODEX TRF7030 are associated (or correlated) with Solution Advanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solution Advanced has no effect on the direction of Samsung KODEX i.e., Samsung KODEX and Solution Advanced go up and down completely randomly.

Pair Corralation between Samsung KODEX and Solution Advanced

Assuming the 90 days trading horizon Samsung KODEX TRF7030 is expected to under-perform the Solution Advanced. But the etf apears to be less risky and, when comparing its historical volatility, Samsung KODEX TRF7030 is 10.91 times less risky than Solution Advanced. The etf trades about -0.01 of its potential returns per unit of risk. The Solution Advanced Technology is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  137,500  in Solution Advanced Technology on December 26, 2024 and sell it today you would earn a total of  110,500  from holding Solution Advanced Technology or generate 80.36% return on investment over 90 days.

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

Samsung KODEX TRF7030  vs.  Solution Advanced Technology

Samsung KODEX TRF7030

Risk-Adjusted Performance

Very Weak

Over the last 90 days Samsung KODEX TRF7030 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Samsung KODEX is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Solution Advanced

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Solution Advanced Technology are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Solution Advanced sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Samsung KODEX and Solution Advanced

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

The idea behind Samsung KODEX TRF7030 and Solution Advanced Technology 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.