Correlation Between SK Holdings and Samsung Life
Can any of the company-specific risk be diversified away by investing in both SK Holdings and Samsung Life 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 SK Holdings and Samsung Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SK Holdings Co and Samsung Life, you can compare the effects of market volatilities on SK Holdings and Samsung Life 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 SK Holdings with a short position of Samsung Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of SK Holdings and Samsung Life.
Diversification Opportunities for SK Holdings and Samsung Life
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 034730 and Samsung is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding SK Holdings Co and Samsung Life in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung Life and SK Holdings 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 SK Holdings Co are associated (or correlated) with Samsung Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samsung Life has no effect on the direction of SK Holdings i.e., SK Holdings and Samsung Life go up and down completely randomly.
Pair Corralation between SK Holdings and Samsung Life
Assuming the 90 days trading horizon SK Holdings Co is expected to under-perform the Samsung Life. In addition to that, SK Holdings is 1.03 times more volatile than Samsung Life. It trades about -0.01 of its total potential returns per unit of risk. Samsung Life is currently generating about 0.05 per unit of volatility. If you would invest 7,100,000 in Samsung Life on September 26, 2024 and sell it today you would earn a total of 3,160,000 from holding Samsung Life or generate 44.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SK Holdings Co vs. Samsung Life
Performance |
| Timeline |
| SK Holdings |
| Samsung Life |
SK Holdings and Samsung Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SK Holdings and Samsung Life
The main advantage of trading using opposite SK Holdings and Samsung Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SK Holdings position performs unexpectedly, Samsung Life 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 Life will offset losses from the drop in Samsung Life's long position.| SK Holdings vs. Busan Industrial Co | SK Holdings vs. Busan Ind | SK Holdings vs. Mirae Asset Daewoo | SK Holdings vs. Shinhan WTI Futures |
| Samsung Life vs. Sungchang Autotech Co | Samsung Life vs. Vitzro Tech Co | Samsung Life vs. Hankook Furniture Co | Samsung Life vs. Sewoon Medical 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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