Correlation Between Korea Information and Samsung Life
Can any of the company-specific risk be diversified away by investing in both Korea Information 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 Korea Information and Samsung Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea Information Engineering and Samsung Life Insurance, you can compare the effects of market volatilities on Korea Information 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 Korea Information with a short position of Samsung Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Information and Samsung Life.
Diversification Opportunities for Korea Information and Samsung Life
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Korea and Samsung is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Korea Information Engineering and Samsung Life Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung Life Insurance 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 Engineering 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 Insurance has no effect on the direction of Korea Information i.e., Korea Information and Samsung Life go up and down completely randomly.
Pair Corralation between Korea Information and Samsung Life
Assuming the 90 days trading horizon Korea Information Engineering is expected to generate 0.65 times more return on investment than Samsung Life. However, Korea Information Engineering is 1.53 times less risky than Samsung Life. It trades about 0.09 of its potential returns per unit of risk. Samsung Life Insurance is currently generating about -0.04 per unit of risk. 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 |
Korea Information Engineering vs. Samsung Life Insurance
Performance |
| Timeline |
| Korea Information |
| Samsung Life Insurance |
Korea Information and Samsung Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Information and Samsung Life
The main advantage of trading using opposite Korea Information and Samsung Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Information 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.| 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 |
| Samsung Life vs. Seoul Electronics Telecom | Samsung Life vs. Daejoo Electronic Materials | Samsung Life vs. Lotte Data Communication | Samsung Life vs. Mobileleader CoLtd |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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