Correlation Between Settlebank and Sam Chun

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

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

Diversification Opportunities for Settlebank and Sam Chun

0.88

Correlation Coefficient

Settlebank  Sam Chun

Very poor diversification

The 3 months correlation between Settlebank and Sam is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Settlebank and Sam Chun Dang in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sam Chun Dang and Settlebank 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 Settlebank are associated (or correlated) with Sam Chun. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sam Chun Dang has no effect on the direction of Settlebank i.e., Settlebank and Sam Chun go up and down completely randomly.

Pair Corralation between Settlebank and Sam Chun

Assuming the 90 days trading horizon Settlebank is expected to generate 0.72 times more return on investment than Sam Chun. However, Settlebank is 1.39 times less risky than Sam Chun. It trades about -0.06 of its potential returns per unit of risk. Sam Chun Dang is currently generating about -0.09 per unit of risk. If you would invest  1,687,000  in Settlebank on September 16, 2024 and sell it today you would lose (212,000) from holding Settlebank or give up 12.57% of portfolio value over 90 days.

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

Settlebank  vs.  Sam Chun Dang

Settlebank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Settlebank 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.

Sam Chun Dang

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sam Chun Dang has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Settlebank and Sam Chun

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

The idea behind Settlebank and Sam Chun Dang 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.