Correlation Between Samsung Electronics and Korea Electric
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Korea Electric 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 Korea Electric 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 Korea Electric Power, you can compare the effects of market volatilities on Samsung Electronics and Korea Electric 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 Korea Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Korea Electric.
Diversification Opportunities for Samsung Electronics and Korea Electric
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Samsung and Korea is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Korea Electric Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Electric Power 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 Korea Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Electric Power has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Korea Electric go up and down completely randomly.
Pair Corralation between Samsung Electronics and Korea Electric
Assuming the 90 days trading horizon Samsung Electronics is expected to generate 22.5 times less return on investment than Korea Electric. But when comparing it to its historical volatility, Samsung Electronics Co is 1.08 times less risky than Korea Electric. It trades about 0.0 of its potential returns per unit of risk. Korea Electric Power is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,960,000 in Korea Electric Power on August 31, 2024 and sell it today you would earn a total of 465,000 from holding Korea Electric Power or generate 23.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. Korea Electric Power
Performance |
| Timeline |
| Samsung Electronics |
| Korea Electric Power |
Samsung Electronics and Korea Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Korea Electric
The main advantage of trading using opposite Samsung Electronics and Korea Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Korea Electric 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 Korea Electric will offset losses from the drop in Korea Electric's long position.| Samsung Electronics vs. Dongsin Engineering Construction | Samsung Electronics vs. Doosan Fuel Cell | Samsung Electronics vs. Daishin Balance 1 | Samsung Electronics vs. Total Soft Bank |
| Korea Electric vs. Busan Industrial Co | Korea Electric vs. Busan Ind | Korea Electric vs. Mirae Asset Daewoo | Korea Electric vs. Finebesteel |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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