Correlation Between Samsung Electronics and IQuest
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and IQuest 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 IQuest 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 IQuest Co, you can compare the effects of market volatilities on Samsung Electronics and IQuest 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 IQuest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and IQuest.
Diversification Opportunities for Samsung Electronics and IQuest
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Samsung and IQuest is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and IQuest Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IQuest 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 IQuest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IQuest has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and IQuest go up and down completely randomly.
Pair Corralation between Samsung Electronics and IQuest
Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the IQuest. But the stock apears to be less risky and, when comparing its historical volatility, Samsung Electronics Co is 1.65 times less risky than IQuest. The stock trades about -0.03 of its potential returns per unit of risk. The IQuest Co is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 268,116 in IQuest Co on August 26, 2024 and sell it today you would lose (18,616) from holding IQuest Co or give up 6.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. IQuest Co
Performance |
| Timeline |
| Samsung Electronics |
| IQuest |
Samsung Electronics and IQuest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and IQuest
The main advantage of trading using opposite Samsung Electronics and IQuest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, IQuest 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 IQuest will offset losses from the drop in IQuest's long position.| Samsung Electronics vs. Hankukpackage Co | Samsung Electronics vs. Haitai Confectionery Foods | Samsung Electronics vs. Sangsangin Investment Securities | Samsung Electronics vs. Samlip General Foods |
| IQuest vs. Samsung Electronics Co | IQuest vs. Samsung Electronics Co | IQuest vs. LG Energy Solution | IQuest vs. SK Hynix |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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