Correlation Between SAMJIN and Korea Real

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

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

Diversification Opportunities for SAMJIN and Korea Real

0.58

Correlation Coefficient

SAMJIN  Korea Real

Very weak diversification

The 3 months correlation between SAMJIN and Korea is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding SAMJIN Co and Korea Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Real Estate and SAMJIN 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 SAMJIN Co are associated (or correlated) with Korea Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Real Estate has no effect on the direction of SAMJIN i.e., SAMJIN and Korea Real go up and down completely randomly.

Pair Corralation between SAMJIN and Korea Real

Assuming the 90 days trading horizon SAMJIN Co is expected to under-perform the Korea Real. In addition to that, SAMJIN is 3.0 times more volatile than Korea Real Estate. It trades about -0.06 of its total potential returns per unit of risk. Korea Real Estate is currently generating about -0.05 per unit of volatility. If you would invest  105,400  in Korea Real Estate on September 12, 2024 and sell it today you would lose (2,700) from holding Korea Real Estate or give up 2.56% of portfolio value over 90 days.

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

SAMJIN Co  vs.  Korea Real Estate

SAMJIN

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SAMJIN Co 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.

Korea Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with SAMJIN and Korea Real

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

The idea behind SAMJIN Co and Korea Real Estate 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.