Correlation Between Samsung Life and Ni Steel
Can any of the company-specific risk be diversified away by investing in both Samsung Life and Ni Steel 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 Life and Ni Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Samsung Life Insurance and Ni Steel, you can compare the effects of market volatilities on Samsung Life and Ni Steel 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 Life with a short position of Ni Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Life and Ni Steel.
Diversification Opportunities for Samsung Life and Ni Steel
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Samsung and 008260 is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Life Insurance and Ni Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ni Steel and Samsung Life 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 Life Insurance are associated (or correlated) with Ni Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ni Steel has no effect on the direction of Samsung Life i.e., Samsung Life and Ni Steel go up and down completely randomly.
Pair Corralation between Samsung Life and Ni Steel
Assuming the 90 days trading horizon Samsung Life Insurance is expected to generate 1.26 times more return on investment than Ni Steel. However, Samsung Life is 1.26 times more volatile than Ni Steel. It trades about 0.07 of its potential returns per unit of risk. Ni Steel is currently generating about -0.07 per unit of risk. If you would invest 6,329,138 in Samsung Life Insurance on September 12, 2024 and sell it today you would earn a total of 3,720,862 from holding Samsung Life Insurance or generate 58.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Life Insurance vs. Ni Steel
Performance |
| Timeline |
| Samsung Life Insurance |
| Ni Steel |
Samsung Life and Ni Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Life and Ni Steel
The main advantage of trading using opposite Samsung Life and Ni Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Life position performs unexpectedly, Ni Steel 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 Ni Steel will offset losses from the drop in Ni Steel's long position.| Samsung Life vs. PI Advanced Materials | Samsung Life vs. Jeong Moon Information | Samsung Life vs. InnoTherapy | Samsung Life vs. Hana Materials |
| Ni Steel vs. Lotte Data Communication | Ni Steel vs. Seoul Electronics Telecom | Ni Steel vs. ECSTELECOM Co | Ni Steel vs. Samsung Life Insurance |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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