Correlation Between Korea Information and Samsung SDI
Can any of the company-specific risk be diversified away by investing in both Korea Information and Samsung SDI 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 Information and Samsung SDI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea Information Communications and Samsung SDI, you can compare the effects of market volatilities on Korea Information and Samsung SDI 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 Information with a short position of Samsung SDI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Information and Samsung SDI.
Diversification Opportunities for Korea Information and Samsung SDI
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Korea and Samsung is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Korea Information Communicatio and Samsung SDI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung SDI and Korea Information 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 Information Communications are associated (or correlated) with Samsung SDI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samsung SDI has no effect on the direction of Korea Information i.e., Korea Information and Samsung SDI go up and down completely randomly.
Pair Corralation between Korea Information and Samsung SDI
Assuming the 90 days trading horizon Korea Information Communications is expected to generate 0.27 times more return on investment than Samsung SDI. However, Korea Information Communications is 3.71 times less risky than Samsung SDI. It trades about 0.06 of its potential returns per unit of risk. Samsung SDI is currently generating about -0.28 per unit of risk. If you would invest 811,000 in Korea Information Communications on August 28, 2024 and sell it today you would earn a total of 9,000 from holding Korea Information Communications or generate 1.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Information Communicatio vs. Samsung SDI
Performance |
| Timeline |
| Korea Information |
| Samsung SDI |
Korea Information and Samsung SDI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Information and Samsung SDI
The main advantage of trading using opposite Korea Information and Samsung SDI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Information position performs unexpectedly, Samsung SDI 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 SDI will offset losses from the drop in Samsung SDI's long position.| Korea Information vs. Korea Real Estate | Korea Information vs. Korea Ratings Co | Korea Information vs. IQuest Co | Korea Information vs. Wonbang Tech Co |
| Samsung SDI vs. Korea Real Estate | Samsung SDI vs. Korea Ratings Co | Samsung SDI vs. IQuest Co | Samsung SDI vs. Wonbang Tech Co |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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