Correlation Between Samsung Electronics and I-Components

Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and I-Components 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 I-Components 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 i Components Co, you can compare the effects of market volatilities on Samsung Electronics and I-Components 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 I-Components. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and I-Components.

Diversification Opportunities for Samsung Electronics and I-Components

-0.31

Correlation Coefficient

Samsung Electronics  I-Components

Very good diversification

The 3 months correlation between Samsung and I-Components is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and i Components Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on i Components 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 I-Components. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of i Components has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and I-Components go up and down completely randomly.

Pair Corralation between Samsung Electronics and I-Components

Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the I-Components. In addition to that, Samsung Electronics is 1.29 times more volatile than i Components Co. It trades about -0.08 of its total potential returns per unit of risk. i Components Co is currently generating about 0.1 per unit of volatility. If you would invest  432,000  in i Components Co on September 14, 2024 and sell it today you would earn a total of  38,500  from holding i Components Co or generate 8.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.31%
Values	Daily Returns

Samsung Electronics Co  vs.  i Components Co

Samsung Electronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Samsung Electronics Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

i Components

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in i Components Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, I-Components may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Samsung Electronics and I-Components

The main advantage of trading using opposite Samsung Electronics and I-Components positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, I-Components 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 I-Components will offset losses from the drop in I-Components' long position.

The idea behind Samsung Electronics Co and i Components Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.