Correlation Between Samsung Electronics and Industrial Bank
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Industrial Bank 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 Industrial Bank 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 Industrial Bank, you can compare the effects of market volatilities on Samsung Electronics and Industrial Bank 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 Industrial Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Industrial Bank.
Diversification Opportunities for Samsung Electronics and Industrial Bank
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Samsung and Industrial is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Industrial Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrial Bank 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 Industrial Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrial Bank has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Industrial Bank go up and down completely randomly.
Pair Corralation between Samsung Electronics and Industrial Bank
Assuming the 90 days trading horizon Samsung Electronics is expected to generate 12.75 times less return on investment than Industrial Bank. In addition to that, Samsung Electronics is 1.39 times more volatile than Industrial Bank. It trades about 0.0 of its total potential returns per unit of risk. Industrial Bank is currently generating about 0.08 per unit of volatility. If you would invest 960,139 in Industrial Bank on August 25, 2024 and sell it today you would earn a total of 519,861 from holding Industrial Bank or generate 54.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. Industrial Bank
Performance |
| Timeline |
| Samsung Electronics |
| Industrial Bank |
Samsung Electronics and Industrial Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Industrial Bank
The main advantage of trading using opposite Samsung Electronics and Industrial Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Industrial Bank 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 Industrial Bank will offset losses from the drop in Industrial Bank's long position.| Samsung Electronics vs. Sam Yang Foods | Samsung Electronics vs. Lotte Chilsung Beverage | Samsung Electronics vs. DONGKUK TED METAL | Samsung Electronics vs. E Investment Development |
| Industrial Bank vs. Grand Korea Leisure | Industrial Bank vs. Infinitt Healthcare Co | Industrial Bank vs. Display Tech Co | Industrial Bank vs. Osang Healthcare Co,Ltd |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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