Correlation Between Samsung Electronics and Korea Information
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Korea Information 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 Information 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 Information Communications, you can compare the effects of market volatilities on Samsung Electronics and Korea Information 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 Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Korea Information.
Diversification Opportunities for Samsung Electronics and Korea Information
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Samsung and Korea is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Korea Information Communicatio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Information 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 Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Information has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Korea Information go up and down completely randomly.
Pair Corralation between Samsung Electronics and Korea Information
Assuming the 90 days trading horizon Samsung Electronics Co is expected to generate 2.9 times more return on investment than Korea Information. However, Samsung Electronics is 2.9 times more volatile than Korea Information Communications. It trades about 0.01 of its potential returns per unit of risk. Korea Information Communications is currently generating about -0.09 per unit of risk. If you would invest 4,545,000 in Samsung Electronics Co on December 11, 2024 and sell it today you would earn a total of 5,000 from holding Samsung Electronics Co or generate 0.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. Korea Information Communicatio
Performance |
| Timeline |
| Samsung Electronics |
| Korea Information |
Samsung Electronics and Korea Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Korea Information
The main advantage of trading using opposite Samsung Electronics and Korea Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Korea Information 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 Information will offset losses from the drop in Korea Information's long position.| Samsung Electronics vs. Dongbu Insurance Co | Samsung Electronics vs. Phoenix Materials Co | Samsung Electronics vs. INNOX Advanced Materials | Samsung Electronics vs. Lotte Energy Materials |
| Korea Information vs. Jeju Air Co | Korea Information vs. Shinsegae Food | Korea Information vs. Sejong Telecom | Korea Information vs. KT Submarine Telecom |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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