Correlation Between Sam Yang and Microfriend

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Can any of the company-specific risk be diversified away by investing in both Sam Yang and Microfriend 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 Sam Yang and Microfriend into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sam Yang Foods and Microfriend, you can compare the effects of market volatilities on Sam Yang and Microfriend 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 Sam Yang with a short position of Microfriend. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sam Yang and Microfriend.

Diversification Opportunities for Sam Yang and Microfriend

-0.48
  Correlation Coefficient

Very good diversification

The 3 months correlation between Sam and Microfriend is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Sam Yang Foods and Microfriend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microfriend and Sam Yang 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 Sam Yang Foods are associated (or correlated) with Microfriend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microfriend has no effect on the direction of Sam Yang i.e., Sam Yang and Microfriend go up and down completely randomly.

Pair Corralation between Sam Yang and Microfriend

Assuming the 90 days trading horizon Sam Yang Foods is expected to generate 0.67 times more return on investment than Microfriend. However, Sam Yang Foods is 1.5 times less risky than Microfriend. It trades about 0.22 of its potential returns per unit of risk. Microfriend is currently generating about -0.08 per unit of risk. If you would invest  54,400,000  in Sam Yang Foods on September 23, 2024 and sell it today you would earn a total of  20,400,000  from holding Sam Yang Foods or generate 37.5% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Sam Yang Foods  vs.  Microfriend

 Performance 
       Timeline  
Sam Yang Foods 

Risk-Adjusted Performance

12 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Sam Yang Foods are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Sam Yang sustained solid returns over the last few months and may actually be approaching a breakup point.
Microfriend 

Risk-Adjusted Performance

0 of 100

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

Sam Yang and Microfriend Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Sam Yang and Microfriend

The main advantage of trading using opposite Sam Yang and Microfriend positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sam Yang position performs unexpectedly, Microfriend 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 Microfriend will offset losses from the drop in Microfriend's long position.
The idea behind Sam Yang Foods and Microfriend 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.
Check out your portfolio center.
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.

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