Correlation Between Samsung Card and MegaStudy

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

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

Diversification Opportunities for Samsung Card and MegaStudy

0.24

Correlation Coefficient

Samsung Card  MegaStudy

Modest diversification

The 3 months correlation between Samsung and MegaStudy is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Card Co and MegaStudy Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MegaStudy and Samsung Card 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 Samsung Card Co are associated (or correlated) with MegaStudy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MegaStudy has no effect on the direction of Samsung Card i.e., Samsung Card and MegaStudy go up and down completely randomly.

Pair Corralation between Samsung Card and MegaStudy

Assuming the 90 days trading horizon Samsung Card Co is expected to under-perform the MegaStudy. In addition to that, Samsung Card is 3.09 times more volatile than MegaStudy Co. It trades about -0.06 of its total potential returns per unit of risk. MegaStudy Co is currently generating about 0.08 per unit of volatility. If you would invest  1,123,000  in MegaStudy Co on September 22, 2024 and sell it today you would earn a total of  28,000  from holding MegaStudy Co or generate 2.49% return on investment over 90 days.

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

Samsung Card Co  vs.  MegaStudy Co

Samsung Card

Risk-Adjusted Performance

0 of 100

Very Weak

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

MegaStudy

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in MegaStudy Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, MegaStudy is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Samsung Card and MegaStudy

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

The idea behind Samsung Card Co and MegaStudy 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.