Correlation Between Organic Special and Ssangyong Materials

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

By analyzing existing cross correlation between Organic Special Pet and Ssangyong Materials Corp, you can compare the effects of market volatilities on Organic Special and Ssangyong Materials 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 Organic Special with a short position of Ssangyong Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Organic Special and Ssangyong Materials.

Diversification Opportunities for Organic Special and Ssangyong Materials

0.09

Correlation Coefficient

Organic Special  Ssangyong Materials

Significant diversification

The 3 months correlation between Organic and Ssangyong is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Organic Special Pet and Ssangyong Materials Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ssangyong Materials Corp and Organic Special 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 Organic Special Pet are associated (or correlated) with Ssangyong Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ssangyong Materials Corp has no effect on the direction of Organic Special i.e., Organic Special and Ssangyong Materials go up and down completely randomly.

Pair Corralation between Organic Special and Ssangyong Materials

Assuming the 90 days trading horizon Organic Special is expected to generate 1.95 times less return on investment than Ssangyong Materials. In addition to that, Organic Special is 1.18 times more volatile than Ssangyong Materials Corp. It trades about 0.07 of its total potential returns per unit of risk. Ssangyong Materials Corp is currently generating about 0.16 per unit of volatility. If you would invest  218,500  in Ssangyong Materials Corp on October 11, 2024 and sell it today you would earn a total of  14,000  from holding Ssangyong Materials Corp or generate 6.41% return on investment over 90 days.

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

Organic Special Pet  vs.  Ssangyong Materials Corp

Organic Special Pet

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Organic Special Pet 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 February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Ssangyong Materials Corp

Risk-Adjusted Performance

0 of 100

Weak

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

Pair Trading with Organic Special and Ssangyong Materials

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

The idea behind Organic Special Pet and Ssangyong Materials Corp 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .