Correlation Between Samsung Electronics and Keum Kang
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Keum Kang 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 Keum Kang 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 Keum Kang Steel, you can compare the effects of market volatilities on Samsung Electronics and Keum Kang 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 Keum Kang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Keum Kang.
Diversification Opportunities for Samsung Electronics and Keum Kang
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Samsung and Keum is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Keum Kang Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keum Kang Steel 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 Keum Kang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keum Kang Steel has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Keum Kang go up and down completely randomly.
Pair Corralation between Samsung Electronics and Keum Kang
Assuming the 90 days trading horizon Samsung Electronics Co is expected to generate 0.84 times more return on investment than Keum Kang. However, Samsung Electronics Co is 1.19 times less risky than Keum Kang. It trades about 0.0 of its potential returns per unit of risk. Keum Kang Steel is currently generating about -0.14 per unit of risk. If you would invest 4,855,000 in Samsung Electronics Co on August 25, 2024 and sell it today you would lose (45,000) from holding Samsung Electronics Co or give up 0.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. Keum Kang Steel
Performance |
| Timeline |
| Samsung Electronics |
| Keum Kang Steel |
Samsung Electronics and Keum Kang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Keum Kang
The main advantage of trading using opposite Samsung Electronics and Keum Kang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Keum Kang 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 Keum Kang will offset losses from the drop in Keum Kang's long position.| Samsung Electronics vs. Youl Chon Chemical | Samsung Electronics vs. Dongnam Chemical Co | Samsung Electronics vs. Korea Information Engineering | Samsung Electronics vs. NICE Information Service |
| Keum Kang vs. Tae Kyung Chemical | Keum Kang vs. Lotte Fine Chemical | Keum Kang vs. Koryo Credit Information | Keum Kang vs. Sung Bo Chemicals |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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