Correlation Between SEOHAN Const and Samil Enterprise

Can any of the company-specific risk be diversified away by investing in both SEOHAN Const and Samil Enterprise 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 SEOHAN Const and Samil Enterprise into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SEOHAN Const EngcoLtd and Samil Enterprise Co, you can compare the effects of market volatilities on SEOHAN Const and Samil Enterprise 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 SEOHAN Const with a short position of Samil Enterprise. Check out your portfolio center. Please also check ongoing floating volatility patterns of SEOHAN Const and Samil Enterprise.

Diversification Opportunities for SEOHAN Const and Samil Enterprise

-0.19

Correlation Coefficient

SEOHAN Const  Samil Enterprise

Good diversification

The 3 months correlation between SEOHAN and Samil is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding SEOHAN Const EngcoLtd and Samil Enterprise Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samil Enterprise and SEOHAN Const 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 SEOHAN Const EngcoLtd are associated (or correlated) with Samil Enterprise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samil Enterprise has no effect on the direction of SEOHAN Const i.e., SEOHAN Const and Samil Enterprise go up and down completely randomly.

Pair Corralation between SEOHAN Const and Samil Enterprise

Assuming the 90 days trading horizon SEOHAN Const EngcoLtd is expected to under-perform the Samil Enterprise. In addition to that, SEOHAN Const is 1.24 times more volatile than Samil Enterprise Co. It trades about -0.01 of its total potential returns per unit of risk. Samil Enterprise Co is currently generating about 0.27 per unit of volatility. If you would invest  285,500  in Samil Enterprise Co on September 12, 2024 and sell it today you would earn a total of  56,000  from holding Samil Enterprise Co or generate 19.61% return on investment over 90 days.

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

SEOHAN Const EngcoLtd  vs.  Samil Enterprise Co

SEOHAN Const EngcoLtd

Risk-Adjusted Performance

0 of 100

Very Weak

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

Samil Enterprise

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Samil Enterprise Co are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Samil Enterprise sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SEOHAN Const and Samil Enterprise

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

The idea behind SEOHAN Const EngcoLtd and Samil Enterprise 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.