Correlation Between Samsung Electronics and K3 Business
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and K3 Business 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 K3 Business 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 K3 Business Technology, you can compare the effects of market volatilities on Samsung Electronics and K3 Business 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 K3 Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and K3 Business.
Diversification Opportunities for Samsung Electronics and K3 Business
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Samsung and KBT is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and K3 Business Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on K3 Business Technology 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 K3 Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of K3 Business Technology has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and K3 Business go up and down completely randomly.
Pair Corralation between Samsung Electronics and K3 Business
Assuming the 90 days trading horizon Samsung Electronics Co is expected to generate 1.46 times more return on investment than K3 Business. However, Samsung Electronics is 1.46 times more volatile than K3 Business Technology. It trades about -0.08 of its potential returns per unit of risk. K3 Business Technology is currently generating about -0.22 per unit of risk. If you would invest 132,830 in Samsung Electronics Co on August 29, 2024 and sell it today you would lose (30,830) from holding Samsung Electronics Co or give up 23.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. K3 Business Technology
Performance |
| Timeline |
| Samsung Electronics |
| K3 Business Technology |
Samsung Electronics and K3 Business Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and K3 Business
The main advantage of trading using opposite Samsung Electronics and K3 Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, K3 Business 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 K3 Business will offset losses from the drop in K3 Business' long position.| Samsung Electronics vs. Cornish Metals | Samsung Electronics vs. Gaztransport et Technigaz | Samsung Electronics vs. Blackstone Loan Financing | Samsung Electronics vs. CAP LEASE AVIATION |
| K3 Business vs. Samsung Electronics Co | K3 Business vs. Samsung Electronics Co | K3 Business vs. Hyundai Motor | K3 Business vs. Toyota Motor Corp |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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