Correlation Between Samsung Electronics and KB No4
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and KB No4 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 KB No4 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 KB No4 SPAC, you can compare the effects of market volatilities on Samsung Electronics and KB No4 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 KB No4. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and KB No4.
Diversification Opportunities for Samsung Electronics and KB No4
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Samsung and 205500 is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and KB No4 SPAC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KB No4 SPAC 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 KB No4. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KB No4 SPAC has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and KB No4 go up and down completely randomly.
Pair Corralation between Samsung Electronics and KB No4
Assuming the 90 days trading horizon Samsung Electronics Co is expected to generate 0.76 times more return on investment than KB No4. However, Samsung Electronics Co is 1.32 times less risky than KB No4. It trades about -0.03 of its potential returns per unit of risk. KB No4 SPAC is currently generating about -0.04 per unit of risk. If you would invest 5,585,526 in Samsung Electronics Co on September 1, 2024 and sell it today you would lose (965,526) from holding Samsung Electronics Co or give up 17.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.62% |
| Values | Daily Returns |
Samsung Electronics Co vs. KB No4 SPAC
Performance |
| Timeline |
| Samsung Electronics |
| KB No4 SPAC |
Samsung Electronics and KB No4 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and KB No4
The main advantage of trading using opposite Samsung Electronics and KB No4 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, KB No4 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 KB No4 will offset losses from the drop in KB No4's long position.| Samsung Electronics vs. Seoul Electronics Telecom | Samsung Electronics vs. Ni Steel | Samsung Electronics vs. CKH Food Health | Samsung Electronics vs. Daedong Steel Co |
| KB No4 vs. Kukdo Chemical Co | KB No4 vs. CU Tech Corp | KB No4 vs. Youngchang Chemical Co | KB No4 vs. Miwon Chemical |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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