Correlation Between Samsung Electronics and Kia Corp
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Kia Corp 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 Electronics and Kia Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Samsung Electronics Co and Kia Corp, you can compare the effects of market volatilities on Samsung Electronics and Kia Corp 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 Electronics with a short position of Kia Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Kia Corp.
Diversification Opportunities for Samsung Electronics and Kia Corp
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Samsung and Kia is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Kia Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kia Corp and Samsung Electronics 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 Electronics Co are associated (or correlated) with Kia Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kia Corp has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Kia Corp go up and down completely randomly.
Pair Corralation between Samsung Electronics and Kia Corp
Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the Kia Corp. But the stock apears to be less risky and, when comparing its historical volatility, Samsung Electronics Co is 1.22 times less risky than Kia Corp. The stock trades about -0.04 of its potential returns per unit of risk. The Kia Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 8,089,875 in Kia Corp on August 24, 2024 and sell it today you would earn a total of 1,670,125 from holding Kia Corp or generate 20.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. Kia Corp
Performance |
| Timeline |
| Samsung Electronics |
| Kia Corp |
Samsung Electronics and Kia Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Kia Corp
The main advantage of trading using opposite Samsung Electronics and Kia Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Kia Corp 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 Kia Corp will offset losses from the drop in Kia Corp's long position.| Samsung Electronics vs. Haesung Industrial Co | Samsung Electronics vs. Taeyang Metal Industrial | Samsung Electronics vs. Hanjin Transportation Co | Samsung Electronics vs. GS Retail Co |
| Kia Corp vs. Busan Industrial Co | Kia Corp vs. Busan Ind | Kia Corp vs. Mirae Asset Daewoo | Kia Corp vs. UNISEM Co |
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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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