Correlation Between Samsung Electronics and KTB Investment
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and KTB Investment 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 KTB Investment 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 KTB Investment Securities, you can compare the effects of market volatilities on Samsung Electronics and KTB Investment 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 KTB Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and KTB Investment.
Diversification Opportunities for Samsung Electronics and KTB Investment
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Samsung and KTB is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and KTB Investment Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KTB Investment Securities 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 KTB Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KTB Investment Securities has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and KTB Investment go up and down completely randomly.
Pair Corralation between Samsung Electronics and KTB Investment
Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the KTB Investment. In addition to that, Samsung Electronics is 1.24 times more volatile than KTB Investment Securities. It trades about -0.1 of its total potential returns per unit of risk. KTB Investment Securities is currently generating about -0.06 per unit of volatility. If you would invest 301,000 in KTB Investment Securities on September 14, 2024 and sell it today you would lose (40,500) from holding KTB Investment Securities or give up 13.46% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Samsung Electronics Co vs. KTB Investment Securities
Performance |
Timeline |
Samsung Electronics |
KTB Investment Securities |
Samsung Electronics and KTB Investment Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Samsung Electronics and KTB Investment
The main advantage of trading using opposite Samsung Electronics and KTB Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, KTB Investment 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 KTB Investment will offset losses from the drop in KTB Investment's long position.Samsung Electronics vs. Ssangyong Information Communication | Samsung Electronics vs. Woori Technology Investment | Samsung Electronics vs. Grand Korea Leisure | Samsung Electronics vs. Daelim Trading Co |
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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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