Correlation Between Korea Computer and Samsung Electronics
Can any of the company-specific risk be diversified away by investing in both Korea Computer and Samsung Electronics 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 Computer and Samsung Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Korea Computer and Samsung Electronics Co, you can compare the effects of market volatilities on Korea Computer and Samsung Electronics 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 Computer with a short position of Samsung Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Korea Computer and Samsung Electronics.
Diversification Opportunities for Korea Computer and Samsung Electronics
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Korea and Samsung is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Korea Computer and Samsung Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung Electronics and Korea Computer 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 Computer are associated (or correlated) with Samsung Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samsung Electronics has no effect on the direction of Korea Computer i.e., Korea Computer and Samsung Electronics go up and down completely randomly.
Pair Corralation between Korea Computer and Samsung Electronics
Assuming the 90 days trading horizon Korea Computer is expected to generate 1.53 times more return on investment than Samsung Electronics. However, Korea Computer is 1.53 times more volatile than Samsung Electronics Co. It trades about 0.1 of its potential returns per unit of risk. Samsung Electronics Co is currently generating about -0.07 per unit of risk. If you would invest 497,500 in Korea Computer on October 28, 2024 and sell it today you would earn a total of 18,500 from holding Korea Computer or generate 3.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Korea Computer vs. Samsung Electronics Co
Performance |
| Timeline |
| Korea Computer |
| Samsung Electronics |
Korea Computer and Samsung Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Korea Computer and Samsung Electronics
The main advantage of trading using opposite Korea Computer and Samsung Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Korea Computer position performs unexpectedly, Samsung Electronics 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 Electronics will offset losses from the drop in Samsung Electronics' long position.| Korea Computer vs. Samsung Electronics Co | Korea Computer vs. Samsung Electronics Co | Korea Computer vs. SK Hynix | Korea Computer vs. HMM Co |
| Samsung Electronics vs. Nable Communications | Samsung Electronics vs. Hankukpackage Co | Samsung Electronics vs. Sejong Telecom | Samsung Electronics vs. Cloud Air 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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