Correlation Between Samsung Card and IQuest Co

Can any of the company-specific risk be diversified away by investing in both Samsung Card and IQuest Co 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 Card and IQuest Co into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Samsung Card Co and IQuest Co, you can compare the effects of market volatilities on Samsung Card and IQuest Co 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 Card with a short position of IQuest Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Card and IQuest Co.

Diversification Opportunities for Samsung Card and IQuest Co

0.16

Correlation Coefficient

Samsung Card  IQuest Co

Average diversification

The 3 months correlation between Samsung and IQuest is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Card Co and IQuest Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IQuest Co and Samsung Card 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 Card Co are associated (or correlated) with IQuest Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IQuest Co has no effect on the direction of Samsung Card i.e., Samsung Card and IQuest Co go up and down completely randomly.

Pair Corralation between Samsung Card and IQuest Co

Assuming the 90 days trading horizon Samsung Card Co is expected to under-perform the IQuest Co. But the stock apears to be less risky and, when comparing its historical volatility, Samsung Card Co is 1.83 times less risky than IQuest Co. The stock trades about -0.06 of its potential returns per unit of risk. The IQuest Co is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  232,500  in IQuest Co on September 23, 2024 and sell it today you would earn a total of  2,000  from holding IQuest Co or generate 0.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Samsung Card Co  vs.  IQuest Co

Samsung Card

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Samsung Card Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Samsung Card is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

IQuest Co

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in IQuest Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, IQuest Co is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Samsung Card and IQuest Co

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

The idea behind Samsung Card Co and IQuest 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.

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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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.