Correlation Between Hanwha InvestmentSecuri and SAMG Entertainment

Can any of the company-specific risk be diversified away by investing in both Hanwha InvestmentSecuri and SAMG Entertainment 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 Hanwha InvestmentSecuri and SAMG Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hanwha InvestmentSecurities Co and SAMG Entertainment Co, you can compare the effects of market volatilities on Hanwha InvestmentSecuri and SAMG Entertainment 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 Hanwha InvestmentSecuri with a short position of SAMG Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanwha InvestmentSecuri and SAMG Entertainment.

Diversification Opportunities for Hanwha InvestmentSecuri and SAMG Entertainment

-0.68

Correlation Coefficient

Hanwha InvestmentSecuri  SAMG Entertainment

Excellent diversification

The 3 months correlation between Hanwha and SAMG is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Hanwha InvestmentSecurities Co and SAMG Entertainment Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SAMG Entertainment and Hanwha InvestmentSecuri 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 Hanwha InvestmentSecurities Co are associated (or correlated) with SAMG Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SAMG Entertainment has no effect on the direction of Hanwha InvestmentSecuri i.e., Hanwha InvestmentSecuri and SAMG Entertainment go up and down completely randomly.

Pair Corralation between Hanwha InvestmentSecuri and SAMG Entertainment

Assuming the 90 days trading horizon Hanwha InvestmentSecurities Co is expected to generate 1.24 times more return on investment than SAMG Entertainment. However, Hanwha InvestmentSecuri is 1.24 times more volatile than SAMG Entertainment Co. It trades about 0.04 of its potential returns per unit of risk. SAMG Entertainment Co is currently generating about -0.03 per unit of risk. If you would invest  483,000  in Hanwha InvestmentSecurities Co on September 22, 2024 and sell it today you would earn a total of  192,000  from holding Hanwha InvestmentSecurities Co or generate 39.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.79%
Values	Daily Returns

Hanwha InvestmentSecurities Co  vs.  SAMG Entertainment Co

Hanwha InvestmentSecuri

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hanwha InvestmentSecurities Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Hanwha InvestmentSecuri sustained solid returns over the last few months and may actually be approaching a breakup point.

SAMG Entertainment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SAMG Entertainment Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Hanwha InvestmentSecuri and SAMG Entertainment

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

The idea behind Hanwha InvestmentSecurities Co and SAMG Entertainment 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.