Correlation Between Samsung Special and SS TECH

Can any of the company-specific risk be diversified away by investing in both Samsung Special and SS TECH 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 SS TECH 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 SS TECH, you can compare the effects of market volatilities on Samsung Special and SS TECH 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 SS TECH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Special and SS TECH.

Diversification Opportunities for Samsung Special and SS TECH

0.6

Correlation Coefficient

Samsung Special  SS TECH

Poor diversification

The 3 months correlation between Samsung and 101490 is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Special Purpose and SS TECH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SS TECH 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 SS TECH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SS TECH has no effect on the direction of Samsung Special i.e., Samsung Special and SS TECH go up and down completely randomly.

Pair Corralation between Samsung Special and SS TECH

Assuming the 90 days trading horizon Samsung Special Purpose is expected to generate 1.33 times more return on investment than SS TECH. However, Samsung Special is 1.33 times more volatile than SS TECH. It trades about -0.02 of its potential returns per unit of risk. SS TECH is currently generating about -0.05 per unit of risk. If you would invest  315,500  in Samsung Special Purpose on September 14, 2024 and sell it today you would lose (107,000) from holding Samsung Special Purpose or give up 33.91% of portfolio value over 90 days.

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

Samsung Special Purpose  vs.  SS TECH

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.

SS TECH

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SS TECH are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, SS TECH may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Samsung Special and SS TECH

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

The idea behind Samsung Special Purpose and SS TECH 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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.