Correlation Between Samsung KODEX and Poongsan

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

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

Diversification Opportunities for Samsung KODEX and Poongsan

0.71

Correlation Coefficient

Samsung KODEX  Poongsan

Poor diversification

The 3 months correlation between Samsung and Poongsan is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Samsung KODEX IT and Poongsan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Poongsan and Samsung KODEX 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 KODEX IT are associated (or correlated) with Poongsan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Poongsan has no effect on the direction of Samsung KODEX i.e., Samsung KODEX and Poongsan go up and down completely randomly.

Pair Corralation between Samsung KODEX and Poongsan

Assuming the 90 days trading horizon Samsung KODEX IT is expected to under-perform the Poongsan. But the etf apears to be less risky and, when comparing its historical volatility, Samsung KODEX IT is 1.8 times less risky than Poongsan. The etf trades about -0.14 of its potential returns per unit of risk. The Poongsan is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  5,450,000  in Poongsan on September 23, 2024 and sell it today you would lose (505,000) from holding Poongsan or give up 9.27% of portfolio value over 90 days.

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

Samsung KODEX IT  vs.  Poongsan

Samsung KODEX IT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Samsung KODEX IT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Etf'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 ETF investors.

Poongsan

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Poongsan 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.

Pair Trading with Samsung KODEX and Poongsan

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

The idea behind Samsung KODEX IT and Poongsan 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.