Correlation Between DAEDUCK ELECTRONICS and Samyang Foods

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

By analyzing existing cross correlation between DAEDUCK ELECTRONICS CoLtd and Samyang Foods Co, you can compare the effects of market volatilities on DAEDUCK ELECTRONICS and Samyang Foods 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 DAEDUCK ELECTRONICS with a short position of Samyang Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of DAEDUCK ELECTRONICS and Samyang Foods.

Diversification Opportunities for DAEDUCK ELECTRONICS and Samyang Foods

0.36

Correlation Coefficient

DAEDUCK ELECTRONICS  Samyang Foods

Weak diversification

The 3 months correlation between DAEDUCK and Samyang is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding DAEDUCK ELECTRONICS CoLtd and Samyang Foods Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samyang Foods and DAEDUCK ELECTRONICS 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 DAEDUCK ELECTRONICS CoLtd are associated (or correlated) with Samyang Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samyang Foods has no effect on the direction of DAEDUCK ELECTRONICS i.e., DAEDUCK ELECTRONICS and Samyang Foods go up and down completely randomly.

Pair Corralation between DAEDUCK ELECTRONICS and Samyang Foods

Assuming the 90 days trading horizon DAEDUCK ELECTRONICS is expected to generate 118.39 times less return on investment than Samyang Foods. But when comparing it to its historical volatility, DAEDUCK ELECTRONICS CoLtd is 1.75 times less risky than Samyang Foods. It trades about 0.0 of its potential returns per unit of risk. Samyang Foods Co is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  55,086,600  in Samyang Foods Co on December 1, 2024 and sell it today you would earn a total of  30,913,400  from holding Samyang Foods Co or generate 56.12% return on investment over 90 days.

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

DAEDUCK ELECTRONICS CoLtd  vs.  Samyang Foods Co

DAEDUCK ELECTRONICS CoLtd

Risk-Adjusted Performance

Very Weak

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

Samyang Foods

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Samyang Foods Co are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Samyang Foods sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DAEDUCK ELECTRONICS and Samyang Foods

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

The idea behind DAEDUCK ELECTRONICS CoLtd and Samyang Foods 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.