Correlation Between ECHO INVESTMENT and Samsung SDI

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

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

Diversification Opportunities for ECHO INVESTMENT and Samsung SDI

0.12

Correlation Coefficient

ECHO INVESTMENT  Samsung SDI

Average diversification

The 3 months correlation between ECHO and Samsung is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding ECHO INVESTMENT ZY and Samsung SDI Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung SDI and ECHO INVESTMENT 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 ECHO INVESTMENT ZY are associated (or correlated) with Samsung SDI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samsung SDI has no effect on the direction of ECHO INVESTMENT i.e., ECHO INVESTMENT and Samsung SDI go up and down completely randomly.

Pair Corralation between ECHO INVESTMENT and Samsung SDI

Assuming the 90 days horizon ECHO INVESTMENT ZY is expected to under-perform the Samsung SDI. But the stock apears to be less risky and, when comparing its historical volatility, ECHO INVESTMENT ZY is 1.77 times less risky than Samsung SDI. The stock trades about -0.11 of its potential returns per unit of risk. The Samsung SDI Co is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  3,450  in Samsung SDI Co on December 4, 2024 and sell it today you would earn a total of  240.00  from holding Samsung SDI Co or generate 6.96% return on investment over 90 days.

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

ECHO INVESTMENT ZY  vs.  Samsung SDI Co

ECHO INVESTMENT ZY

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ECHO INVESTMENT ZY are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, ECHO INVESTMENT is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Samsung SDI

Risk-Adjusted Performance

Very Weak

Over the last 90 days Samsung SDI Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with ECHO INVESTMENT and Samsung SDI

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

The idea behind ECHO INVESTMENT ZY and Samsung SDI 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.