Correlation Between Hanshin Construction and Samsung Life
Can any of the company-specific risk be diversified away by investing in both Hanshin Construction and Samsung Life 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 Hanshin Construction and Samsung Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hanshin Construction Co and Samsung Life Insurance, you can compare the effects of market volatilities on Hanshin Construction and Samsung Life 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 Hanshin Construction with a short position of Samsung Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanshin Construction and Samsung Life.
Diversification Opportunities for Hanshin Construction and Samsung Life
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hanshin and Samsung is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Hanshin Construction Co and Samsung Life Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung Life Insurance and Hanshin Construction 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 Hanshin Construction Co are associated (or correlated) with Samsung Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samsung Life Insurance has no effect on the direction of Hanshin Construction i.e., Hanshin Construction and Samsung Life go up and down completely randomly.
Pair Corralation between Hanshin Construction and Samsung Life
Assuming the 90 days trading horizon Hanshin Construction Co is expected to under-perform the Samsung Life. But the stock apears to be less risky and, when comparing its historical volatility, Hanshin Construction Co is 2.83 times less risky than Samsung Life. The stock trades about -0.26 of its potential returns per unit of risk. The Samsung Life Insurance is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 9,320,000 in Samsung Life Insurance on November 4, 2024 and sell it today you would lose (410,000) from holding Samsung Life Insurance or give up 4.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hanshin Construction Co vs. Samsung Life Insurance
Performance |
| Timeline |
| Hanshin Construction |
| Samsung Life Insurance |
Hanshin Construction and Samsung Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanshin Construction and Samsung Life
The main advantage of trading using opposite Hanshin Construction and Samsung Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanshin Construction position performs unexpectedly, Samsung Life 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 Samsung Life will offset losses from the drop in Samsung Life's long position.| Hanshin Construction vs. DB Financial Investment | Hanshin Construction vs. Korea Information Engineering | Hanshin Construction vs. Insung Information Co | Hanshin Construction vs. Samyung Trading Co |
| Samsung Life vs. Namhae Chemical | Samsung Life vs. Sung Bo Chemicals | Samsung Life vs. Dongil Metal Co | Samsung Life vs. Choil Aluminum |
Check out your portfolio center.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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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