Correlation Between Samlip General and Dongbang Ship

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

Diversification Opportunities for Samlip General and Dongbang Ship

-0.35

Correlation Coefficient

Samlip General  Dongbang Ship

Very good diversification

The 3 months correlation between Samlip and Dongbang is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Samlip General Foods and Dongbang Ship Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongbang Ship Machinery 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 Dongbang Ship. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongbang Ship Machinery has no effect on the direction of Samlip General i.e., Samlip General and Dongbang Ship go up and down completely randomly.

Pair Corralation between Samlip General and Dongbang Ship

Assuming the 90 days trading horizon Samlip General is expected to generate 1.15 times less return on investment than Dongbang Ship. But when comparing it to its historical volatility, Samlip General Foods is 2.87 times less risky than Dongbang Ship. It trades about 0.12 of its potential returns per unit of risk. Dongbang Ship Machinery is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  305,000  in Dongbang Ship Machinery on September 27, 2024 and sell it today you would earn a total of  8,000  from holding Dongbang Ship Machinery or generate 2.62% return on investment over 90 days.

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

Samlip General Foods  vs.  Dongbang Ship Machinery

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.

Dongbang Ship Machinery

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dongbang Ship Machinery are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Dongbang Ship sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Samlip General and Dongbang Ship

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

The idea behind Samlip General Foods and Dongbang Ship Machinery 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.