Correlation Between Samyang Foods and Cheryong Industrial

Can any of the company-specific risk be diversified away by investing in both Samyang Foods and Cheryong Industrial 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 Samyang Foods and Cheryong Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Samyang Foods Co and Cheryong Industrial CoLtd, you can compare the effects of market volatilities on Samyang Foods and Cheryong Industrial 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 Samyang Foods with a short position of Cheryong Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samyang Foods and Cheryong Industrial.

Diversification Opportunities for Samyang Foods and Cheryong Industrial

-0.41

Correlation Coefficient

Samyang Foods  Cheryong Industrial

Very good diversification

The 3 months correlation between Samyang and Cheryong is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Samyang Foods Co and Cheryong Industrial CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cheryong Industrial CoLtd and Samyang Foods 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 Samyang Foods Co are associated (or correlated) with Cheryong Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cheryong Industrial CoLtd has no effect on the direction of Samyang Foods i.e., Samyang Foods and Cheryong Industrial go up and down completely randomly.

Pair Corralation between Samyang Foods and Cheryong Industrial

Assuming the 90 days trading horizon Samyang Foods Co is expected to generate 0.85 times more return on investment than Cheryong Industrial. However, Samyang Foods Co is 1.18 times less risky than Cheryong Industrial. It trades about 0.11 of its potential returns per unit of risk. Cheryong Industrial CoLtd is currently generating about 0.04 per unit of risk. If you would invest  12,616,800  in Samyang Foods Co on September 12, 2024 and sell it today you would earn a total of  54,283,200  from holding Samyang Foods Co or generate 430.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Samyang Foods Co  vs.  Cheryong Industrial CoLtd

Samyang Foods

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Samyang Foods Co are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Samyang Foods sustained solid returns over the last few months and may actually be approaching a breakup point.

Cheryong Industrial CoLtd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cheryong Industrial CoLtd 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 January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Samyang Foods and Cheryong Industrial

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

The idea behind Samyang Foods Co and Cheryong Industrial CoLtd 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.