Correlation Between Samsung Life and Korea Information
Can any of the company-specific risk be diversified away by investing in both Samsung Life and Korea Information 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 Korea Information 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 Korea Information Engineering, you can compare the effects of market volatilities on Samsung Life and Korea Information 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 Korea Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Life and Korea Information.
Diversification Opportunities for Samsung Life and Korea Information
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Samsung and Korea is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Life Insurance and Korea Information Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Information 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 Korea Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Information has no effect on the direction of Samsung Life i.e., Samsung Life and Korea Information go up and down completely randomly.
Pair Corralation between Samsung Life and Korea Information
Assuming the 90 days trading horizon Samsung Life Insurance is expected to under-perform the Korea Information. In addition to that, Samsung Life is 1.53 times more volatile than Korea Information Engineering. It trades about -0.04 of its total potential returns per unit of risk. Korea Information Engineering is currently generating about 0.09 per unit of volatility. If you would invest 251,000 in Korea Information Engineering on November 3, 2024 and sell it today you would earn a total of 7,000 from holding Korea Information Engineering or generate 2.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Life Insurance vs. Korea Information Engineering
Performance |
| Timeline |
| Samsung Life Insurance |
| Korea Information |
Samsung Life and Korea Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Life and Korea Information
The main advantage of trading using opposite Samsung Life and Korea Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Life position performs unexpectedly, Korea Information 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 Korea Information will offset losses from the drop in Korea Information's long position.| Samsung Life vs. Seoul Electronics Telecom | Samsung Life vs. Daejoo Electronic Materials | Samsung Life vs. Lotte Data Communication | Samsung Life vs. Mobileleader CoLtd |
| Korea Information vs. BIT Computer Co | Korea Information vs. Daesung Hi Tech Co | Korea Information vs. Dongil Metal Co | Korea Information vs. Display 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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