Correlation Between Samsung Electronics and INSUN Environmental
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and INSUN Environmental 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 INSUN Environmental 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 INSUN Environmental New, you can compare the effects of market volatilities on Samsung Electronics and INSUN Environmental 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 INSUN Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and INSUN Environmental.
Diversification Opportunities for Samsung Electronics and INSUN Environmental
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Samsung and INSUN is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and INSUN Environmental New in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INSUN Environmental New 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 INSUN Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INSUN Environmental New has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and INSUN Environmental go up and down completely randomly.
Pair Corralation between Samsung Electronics and INSUN Environmental
Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the INSUN Environmental. But the stock apears to be less risky and, when comparing its historical volatility, Samsung Electronics Co is 2.23 times less risky than INSUN Environmental. The stock trades about -0.16 of its potential returns per unit of risk. The INSUN Environmental New is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 500,000 in INSUN Environmental New on September 25, 2024 and sell it today you would earn a total of 45,000 from holding INSUN Environmental New or generate 9.0% 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. INSUN Environmental New
Performance |
| Timeline |
| Samsung Electronics |
| INSUN Environmental New |
Samsung Electronics and INSUN Environmental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and INSUN Environmental
The main advantage of trading using opposite Samsung Electronics and INSUN Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, INSUN Environmental 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 INSUN Environmental will offset losses from the drop in INSUN Environmental'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 |
| INSUN Environmental vs. Korea Environment Technology | INSUN Environmental vs. Paradise Co | INSUN Environmental vs. Seoul Semiconductor Co | INSUN Environmental vs. JUSUNG ENGINEERING 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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