Correlation Between Samsung Electronics and Innowireless
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Innowireless 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 Innowireless 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 Innowireless Co, you can compare the effects of market volatilities on Samsung Electronics and Innowireless 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 Innowireless. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Innowireless.
Diversification Opportunities for Samsung Electronics and Innowireless
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Samsung and Innowireless is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Innowireless Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innowireless 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 Innowireless. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innowireless has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Innowireless go up and down completely randomly.
Pair Corralation between Samsung Electronics and Innowireless
Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the Innowireless. But the stock apears to be less risky and, when comparing its historical volatility, Samsung Electronics Co is 1.36 times less risky than Innowireless. The stock trades about -0.02 of its potential returns per unit of risk. The Innowireless Co is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 2,225,000 in Innowireless Co on September 12, 2024 and sell it today you would lose (321,000) from holding Innowireless Co or give up 14.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.8% |
| Values | Daily Returns |
Samsung Electronics Co vs. Innowireless Co
Performance |
| Timeline |
| Samsung Electronics |
| Innowireless |
Samsung Electronics and Innowireless Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Innowireless
The main advantage of trading using opposite Samsung Electronics and Innowireless positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Innowireless 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 Innowireless will offset losses from the drop in Innowireless' long position.| Samsung Electronics vs. LG Corp | Samsung Electronics vs. Solution Advanced Technology | Samsung Electronics vs. Busan Industrial Co | Samsung Electronics vs. Busan Ind |
| Innowireless vs. Samsung Electronics Co | Innowireless vs. Samsung Electronics Co | Innowireless vs. SK Hynix | Innowireless vs. POSCO Holdings |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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