Correlation Between Samlip General and Samsung Life

Can any of the company-specific risk be diversified away by investing in both Samlip General and Samsung Life 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 Samsung Life 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 Samsung Life Insurance, you can compare the effects of market volatilities on Samlip General and Samsung Life 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 Samsung Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samlip General and Samsung Life.

Diversification Opportunities for Samlip General and Samsung Life

-0.51

Correlation Coefficient

Samlip General  Samsung Life

Excellent diversification

The 3 months correlation between Samlip and Samsung is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Samlip General Foods and Samsung Life Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung Life Insurance 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 Samsung Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samsung Life Insurance has no effect on the direction of Samlip General i.e., Samlip General and Samsung Life go up and down completely randomly.

Pair Corralation between Samlip General and Samsung Life

Assuming the 90 days trading horizon Samlip General is expected to generate 4.14 times less return on investment than Samsung Life. But when comparing it to its historical volatility, Samlip General Foods is 1.73 times less risky than Samsung Life. It trades about 0.02 of its potential returns per unit of risk. Samsung Life Insurance is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  9,320,000  in Samsung Life Insurance on September 29, 2024 and sell it today you would earn a total of  400,000  from holding Samsung Life Insurance or generate 4.29% return on investment over 90 days.

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

Samlip General Foods  vs.  Samsung Life Insurance

Samlip General Foods

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Samlip General Foods are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Samsung Life Insurance

Risk-Adjusted Performance

3 of 100

Insignificant

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

Pair Trading with Samlip General and Samsung Life

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

The idea behind Samlip General Foods and Samsung Life Insurance 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.