Correlation Between Samlip General and Tae Kyung

Can any of the company-specific risk be diversified away by investing in both Samlip General and Tae Kyung 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 Samlip General and Tae Kyung into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Samlip General Foods and Tae Kyung Chemical, you can compare the effects of market volatilities on Samlip General and Tae Kyung 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 Samlip General with a short position of Tae Kyung. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samlip General and Tae Kyung.

Diversification Opportunities for Samlip General and Tae Kyung

0.3

Correlation Coefficient

Samlip General  Tae Kyung

Weak diversification

The 3 months correlation between Samlip and Tae is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Samlip General Foods and Tae Kyung Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tae Kyung Chemical and Samlip General 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 Samlip General Foods are associated (or correlated) with Tae Kyung. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tae Kyung Chemical has no effect on the direction of Samlip General i.e., Samlip General and Tae Kyung go up and down completely randomly.

Pair Corralation between Samlip General and Tae Kyung

Assuming the 90 days trading horizon Samlip General Foods is expected to under-perform the Tae Kyung. But the stock apears to be less risky and, when comparing its historical volatility, Samlip General Foods is 1.52 times less risky than Tae Kyung. The stock trades about -0.05 of its potential returns per unit of risk. The Tae Kyung Chemical is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,019,757  in Tae Kyung Chemical on September 21, 2024 and sell it today you would earn a total of  98,243  from holding Tae Kyung Chemical or generate 9.63% return on investment over 90 days.

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

Samlip General Foods  vs.  Tae Kyung Chemical

Samlip General Foods

Risk-Adjusted Performance

0 of 100

Very Weak

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

Tae Kyung Chemical

Risk-Adjusted Performance

4 of 100

Insignificant

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

Pair Trading with Samlip General and Tae Kyung

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

The idea behind Samlip General Foods and Tae Kyung Chemical 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.