Correlation Between Samsung Electronics and Korea Air
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Korea Air 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 Air 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 Air Svc, you can compare the effects of market volatilities on Samsung Electronics and Korea Air 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 Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Korea Air.
Diversification Opportunities for Samsung Electronics and Korea Air
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Samsung and Korea is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Korea Air Svc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Air Svc 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 Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Air Svc has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Korea Air go up and down completely randomly.
Pair Corralation between Samsung Electronics and Korea Air
Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the Korea Air. But the stock apears to be less risky and, when comparing its historical volatility, Samsung Electronics Co is 1.45 times less risky than Korea Air. The stock trades about -0.36 of its potential returns per unit of risk. The Korea Air Svc is currently generating about -0.12 of returns per unit of risk over similar time horizon. If you would invest 5,480,000 in Korea Air Svc on November 6, 2024 and sell it today you would lose (210,000) from holding Korea Air Svc or give up 3.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. Korea Air Svc
Performance |
| Timeline |
| Samsung Electronics |
| Korea Air Svc |
Samsung Electronics and Korea Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Korea Air
The main advantage of trading using opposite Samsung Electronics and Korea Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Korea Air 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 Air will offset losses from the drop in Korea Air's long position.| Samsung Electronics vs. Daejung Chemicals Metals | Samsung Electronics vs. Asiana Airlines | Samsung Electronics vs. Inzi Display CoLtd | Samsung Electronics vs. Shin Steel Co |
| Korea Air vs. Dongil Metal Co | Korea Air vs. Aprogen Healthcare Games | Korea Air vs. Clean Science co | Korea Air vs. Formetal 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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