Correlation Between Rock Tech and Samsung SDI

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

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

Diversification Opportunities for Rock Tech and Samsung SDI

0.71

Correlation Coefficient

Rock Tech  Samsung SDI

Poor diversification

The 3 months correlation between Rock and Samsung is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Rock Tech Lithium and Samsung SDI Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung SDI and Rock Tech 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 Rock Tech Lithium 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 Rock Tech i.e., Rock Tech and Samsung SDI go up and down completely randomly.

Pair Corralation between Rock Tech and Samsung SDI

Assuming the 90 days trading horizon Rock Tech Lithium is expected to under-perform the Samsung SDI. In addition to that, Rock Tech is 2.04 times more volatile than Samsung SDI Co. It trades about -0.25 of its total potential returns per unit of risk. Samsung SDI Co is currently generating about -0.08 per unit of volatility. If you would invest  4,410  in Samsung SDI Co on September 18, 2024 and sell it today you would lose (220.00) from holding Samsung SDI Co or give up 4.99% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Rock Tech Lithium  vs.  Samsung SDI Co

Rock Tech Lithium

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rock Tech Lithium 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 forward indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Samsung SDI

Risk-Adjusted Performance

0 of 100

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 January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Rock Tech and Samsung SDI

The main advantage of trading using opposite Rock Tech and Samsung SDI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rock Tech 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 Rock Tech Lithium 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.