Correlation Between Samick Musical and Haitai Confectionery

Can any of the company-specific risk be diversified away by investing in both Samick Musical and Haitai Confectionery 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 Samick Musical and Haitai Confectionery into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Samick Musical Instruments and Haitai Confectionery Foods, you can compare the effects of market volatilities on Samick Musical and Haitai Confectionery 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 Samick Musical with a short position of Haitai Confectionery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samick Musical and Haitai Confectionery.

Diversification Opportunities for Samick Musical and Haitai Confectionery

0.12

Correlation Coefficient

Samick Musical  Haitai Confectionery

Average diversification

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

Pair Corralation between Samick Musical and Haitai Confectionery

Assuming the 90 days trading horizon Samick Musical Instruments is expected to generate 0.3 times more return on investment than Haitai Confectionery. However, Samick Musical Instruments is 3.36 times less risky than Haitai Confectionery. It trades about 0.2 of its potential returns per unit of risk. Haitai Confectionery Foods is currently generating about 0.03 per unit of risk. If you would invest  104,000  in Samick Musical Instruments on September 4, 2024 and sell it today you would earn a total of  6,800  from holding Samick Musical Instruments or generate 6.54% return on investment over 90 days.

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

Samick Musical Instruments  vs.  Haitai Confectionery Foods

Samick Musical Instr

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Samick Musical Instruments are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Samick Musical may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Haitai Confectionery

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Haitai Confectionery Foods are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Haitai Confectionery is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Samick Musical and Haitai Confectionery

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

The idea behind Samick Musical Instruments and Haitai Confectionery Foods 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.