Correlation Between Solus Advanced and Samsung Publishing

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

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

Diversification Opportunities for Solus Advanced and Samsung Publishing

-0.32

Correlation Coefficient

Solus Advanced  Samsung Publishing

Very good diversification

The 3 months correlation between Solus and Samsung is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Solus Advanced Materials and Samsung Publishing Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung Publishing and Solus Advanced 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 Solus Advanced Materials 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 Solus Advanced i.e., Solus Advanced and Samsung Publishing go up and down completely randomly.

Pair Corralation between Solus Advanced and Samsung Publishing

Assuming the 90 days trading horizon Solus Advanced Materials is expected to under-perform the Samsung Publishing. In addition to that, Solus Advanced is 1.19 times more volatile than Samsung Publishing Co. It trades about -0.02 of its total potential returns per unit of risk. Samsung Publishing Co is currently generating about -0.01 per unit of volatility. If you would invest  2,442,615  in Samsung Publishing Co on October 23, 2024 and sell it today you would lose (876,615) from holding Samsung Publishing Co or give up 35.89% of portfolio value over 90 days.

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

Solus Advanced Materials  vs.  Samsung Publishing Co

Solus Advanced Materials

Risk-Adjusted Performance

0 of 100

Very Weak

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

Samsung Publishing

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Samsung Publishing Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Samsung Publishing sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Solus Advanced and Samsung Publishing

The main advantage of trading using opposite Solus Advanced and Samsung Publishing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Solus Advanced 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 Solus Advanced Materials 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.

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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.