Correlation Between Samsung Electronics and ICD
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and ICD 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 ICD 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 ICD Co, you can compare the effects of market volatilities on Samsung Electronics and ICD 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 ICD. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and ICD.
Diversification Opportunities for Samsung Electronics and ICD
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Samsung and ICD is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and ICD Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ICD Co 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 ICD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ICD Co has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and ICD go up and down completely randomly.
Pair Corralation between Samsung Electronics and ICD
Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the ICD. In addition to that, Samsung Electronics is 1.1 times more volatile than ICD Co. It trades about -0.05 of its total potential returns per unit of risk. ICD Co is currently generating about -0.02 per unit of volatility. If you would invest 478,000 in ICD Co on August 27, 2024 and sell it today you would lose (8,000) from holding ICD Co or give up 1.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. ICD Co
Performance |
| Timeline |
| Samsung Electronics |
| ICD Co |
Samsung Electronics and ICD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and ICD
The main advantage of trading using opposite Samsung Electronics and ICD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, ICD 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 ICD will offset losses from the drop in ICD's long position.| Samsung Electronics vs. Dongil Metal Co | Samsung Electronics vs. Formetal Co | Samsung Electronics vs. Digital Multimedia Technology | Samsung Electronics vs. Dongwon Metal Co |
| ICD vs. Samsung Electronics Co | ICD vs. Samsung Electronics Co | ICD vs. LG Energy Solution | ICD vs. SK Hynix |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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