Correlation Between Korea Electric and Samsung Electronics
Can any of the company-specific risk be diversified away by investing in both Korea Electric and Samsung Electronics 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 Korea Electric and Samsung Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea Electric Power and Samsung Electronics Co, you can compare the effects of market volatilities on Korea Electric and Samsung Electronics 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 Korea Electric with a short position of Samsung Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Electric and Samsung Electronics.
Diversification Opportunities for Korea Electric and Samsung Electronics
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Korea and Samsung is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Korea Electric Power and Samsung Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung Electronics and Korea Electric 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 Korea Electric Power are associated (or correlated) with Samsung Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samsung Electronics has no effect on the direction of Korea Electric i.e., Korea Electric and Samsung Electronics go up and down completely randomly.
Pair Corralation between Korea Electric and Samsung Electronics
Assuming the 90 days trading horizon Korea Electric Power is expected to generate 0.99 times more return on investment than Samsung Electronics. However, Korea Electric Power is 1.01 times less risky than Samsung Electronics. It trades about 0.04 of its potential returns per unit of risk. Samsung Electronics Co is currently generating about -0.05 per unit of risk. If you would invest 2,055,000 in Korea Electric Power on September 13, 2024 and sell it today you would earn a total of 60,000 from holding Korea Electric Power or generate 2.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Electric Power vs. Samsung Electronics Co
Performance |
| Timeline |
| Korea Electric Power |
| Samsung Electronics |
Korea Electric and Samsung Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Electric and Samsung Electronics
The main advantage of trading using opposite Korea Electric and Samsung Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Electric position performs unexpectedly, Samsung Electronics 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 Samsung Electronics will offset losses from the drop in Samsung Electronics' long position.| Korea Electric vs. Samyang Foods Co | Korea Electric vs. Haitai Confectionery Foods | Korea Electric vs. Automobile Pc | Korea Electric vs. CKH Food Health |
| Samsung Electronics vs. LG Corp | Samsung Electronics vs. Solution Advanced Technology | Samsung Electronics vs. Busan Industrial Co | Samsung Electronics vs. Busan Ind |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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