Correlation Between Taekwang Ind and Sam Yang

Can any of the company-specific risk be diversified away by investing in both Taekwang Ind and Sam Yang 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 Taekwang Ind and Sam Yang into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Taekwang Ind and Sam Yang Foods, you can compare the effects of market volatilities on Taekwang Ind and Sam Yang 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 Taekwang Ind with a short position of Sam Yang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Taekwang Ind and Sam Yang.

Diversification Opportunities for Taekwang Ind and Sam Yang

0.71

Correlation Coefficient

Taekwang Ind  Sam Yang

Poor diversification

The 3 months correlation between Taekwang and Sam is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Taekwang Ind and Sam Yang Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sam Yang Foods and Taekwang Ind 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 Taekwang Ind are associated (or correlated) with Sam Yang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sam Yang Foods has no effect on the direction of Taekwang Ind i.e., Taekwang Ind and Sam Yang go up and down completely randomly.

Pair Corralation between Taekwang Ind and Sam Yang

Assuming the 90 days trading horizon Taekwang Ind is expected to generate 1.38 times less return on investment than Sam Yang. But when comparing it to its historical volatility, Taekwang Ind is 1.73 times less risky than Sam Yang. It trades about 0.06 of its potential returns per unit of risk. Sam Yang Foods is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  48,900,000  in Sam Yang Foods on September 2, 2024 and sell it today you would earn a total of  3,000,000  from holding Sam Yang Foods or generate 6.13% return on investment over 90 days.

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

Taekwang Ind  vs.  Sam Yang Foods

Taekwang Ind

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Taekwang Ind are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Taekwang Ind may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Sam Yang Foods

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Sam Yang Foods are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Sam Yang may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Taekwang Ind and Sam Yang

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

The idea behind Taekwang Ind and Sam Yang 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.

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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.