Correlation Between Samlip General and Lion Chemtech

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

Diversification Opportunities for Samlip General and Lion Chemtech

-0.76

Correlation Coefficient

Samlip General  Lion Chemtech

Pay attention - limited upside

The 3 months correlation between Samlip and Lion is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Samlip General Foods and Lion Chemtech Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lion Chemtech 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 Lion Chemtech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lion Chemtech has no effect on the direction of Samlip General i.e., Samlip General and Lion Chemtech go up and down completely randomly.

Pair Corralation between Samlip General and Lion Chemtech

Assuming the 90 days trading horizon Samlip General Foods is expected to under-perform the Lion Chemtech. But the stock apears to be less risky and, when comparing its historical volatility, Samlip General Foods is 2.3 times less risky than Lion Chemtech. The stock trades about -0.14 of its potential returns per unit of risk. The Lion Chemtech Co is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  217,000  in Lion Chemtech Co on September 3, 2024 and sell it today you would earn a total of  32,000  from holding Lion Chemtech Co or generate 14.75% return on investment over 90 days.

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

Samlip General Foods  vs.  Lion Chemtech Co

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 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.

Lion Chemtech

Risk-Adjusted Performance

7 of 100

OK

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

Pair Trading with Samlip General and Lion Chemtech

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

The idea behind Samlip General Foods and Lion Chemtech 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.