Correlation Between Samsung Electronics and Innovative Industrial
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Innovative Industrial 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 Electronics and Innovative Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Samsung Electronics Co and Innovative Industrial Properties, you can compare the effects of market volatilities on Samsung Electronics and Innovative Industrial 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 Electronics with a short position of Innovative Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Innovative Industrial.
Diversification Opportunities for Samsung Electronics and Innovative Industrial
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Samsung and Innovative is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Innovative Industrial Properti in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovative Industrial and Samsung Electronics 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 Electronics Co are associated (or correlated) with Innovative Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovative Industrial has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Innovative Industrial go up and down completely randomly.
Pair Corralation between Samsung Electronics and Innovative Industrial
Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the Innovative Industrial. But the stock apears to be less risky and, when comparing its historical volatility, Samsung Electronics Co is 1.04 times less risky than Innovative Industrial. The stock trades about -0.15 of its potential returns per unit of risk. The Innovative Industrial Properties is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest 12,448 in Innovative Industrial Properties on September 12, 2024 and sell it today you would lose (1,715) from holding Innovative Industrial Properties or give up 13.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.46% |
| Values | Daily Returns |
Samsung Electronics Co vs. Innovative Industrial Properti
Performance |
| Timeline |
| Samsung Electronics |
| Innovative Industrial |
Samsung Electronics and Innovative Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Innovative Industrial
The main advantage of trading using opposite Samsung Electronics and Innovative Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Innovative Industrial 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 Innovative Industrial will offset losses from the drop in Innovative Industrial's long position.| Samsung Electronics vs. Fidelity National Information | Samsung Electronics vs. Edita Food Industries | Samsung Electronics vs. Axfood AB | Samsung Electronics vs. Air Products Chemicals |
| Innovative Industrial vs. Samsung Electronics Co | Innovative Industrial vs. Samsung Electronics Co | Innovative Industrial vs. Hyundai Motor | Innovative Industrial vs. Reliance Industries Ltd |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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