Correlation Between Samsung Special and NEOWIZ

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

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

Diversification Opportunities for Samsung Special and NEOWIZ

0.68

Correlation Coefficient

Samsung Special  NEOWIZ

Poor diversification

The 3 months correlation between Samsung and NEOWIZ is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Special Purpose and NEOWIZ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEOWIZ and Samsung Special 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 Special Purpose are associated (or correlated) with NEOWIZ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEOWIZ has no effect on the direction of Samsung Special i.e., Samsung Special and NEOWIZ go up and down completely randomly.

Pair Corralation between Samsung Special and NEOWIZ

Assuming the 90 days trading horizon Samsung Special Purpose is expected to generate 2.22 times more return on investment than NEOWIZ. However, Samsung Special is 2.22 times more volatile than NEOWIZ. It trades about -0.01 of its potential returns per unit of risk. NEOWIZ is currently generating about -0.05 per unit of risk. If you would invest  223,000  in Samsung Special Purpose on September 15, 2024 and sell it today you would lose (13,000) from holding Samsung Special Purpose or give up 5.83% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.33%
Values	Daily Returns

Samsung Special Purpose  vs.  NEOWIZ

Samsung Special Purpose

Risk-Adjusted Performance

0 of 100

Very Weak

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

NEOWIZ

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NEOWIZ has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, NEOWIZ 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 Special and NEOWIZ

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

The idea behind Samsung Special Purpose and NEOWIZ 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.