Correlation Between Samsung Electronics and Han Kook
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Han Kook 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 Han Kook 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 Han Kook Capital, you can compare the effects of market volatilities on Samsung Electronics and Han Kook 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 Han Kook. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Han Kook.
Diversification Opportunities for Samsung Electronics and Han Kook
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Samsung and Han is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Han Kook Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Han Kook Capital 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 Han Kook. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Han Kook Capital has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Han Kook go up and down completely randomly.
Pair Corralation between Samsung Electronics and Han Kook
Assuming the 90 days trading horizon Samsung Electronics Co is expected to generate 3.98 times more return on investment than Han Kook. However, Samsung Electronics is 3.98 times more volatile than Han Kook Capital. It trades about 0.01 of its potential returns per unit of risk. Han Kook Capital is currently generating about 0.01 per unit of risk. If you would invest 5,810,000 in Samsung Electronics Co on August 28, 2024 and sell it today you would lose (20,000) from holding Samsung Electronics Co or give up 0.34% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. Han Kook Capital
Performance |
| Timeline |
| Samsung Electronics |
| Han Kook Capital |
Samsung Electronics and Han Kook Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Han Kook
The main advantage of trading using opposite Samsung Electronics and Han Kook positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Han Kook 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 Han Kook will offset losses from the drop in Han Kook's long position.| Samsung Electronics vs. Lotte Fine Chemical | Samsung Electronics vs. SH Energy Chemical | Samsung Electronics vs. Hansol Chemical Co | Samsung Electronics vs. Youngchang Chemical Co |
| Han Kook vs. Korea New Network | Han Kook vs. Dong A Eltek | Han Kook vs. Dreamus Company | Han Kook vs. SK Bioscience 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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