Correlation Between IQuest Co and Samsung Electronics

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

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

Diversification Opportunities for IQuest Co and Samsung Electronics

-0.22

Correlation Coefficient

IQuest Co  Samsung Electronics

Very good diversification

The 3 months correlation between IQuest and Samsung is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding IQuest Co and Samsung Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung Electronics and IQuest Co 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 IQuest Co are associated (or correlated) with Samsung Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samsung Electronics has no effect on the direction of IQuest Co i.e., IQuest Co and Samsung Electronics go up and down completely randomly.

Pair Corralation between IQuest Co and Samsung Electronics

Assuming the 90 days trading horizon IQuest Co is expected to generate 1.5 times more return on investment than Samsung Electronics. However, IQuest Co is 1.5 times more volatile than Samsung Electronics Co. It trades about 0.06 of its potential returns per unit of risk. Samsung Electronics Co is currently generating about -0.12 per unit of risk. If you would invest  208,000  in IQuest Co on September 12, 2024 and sell it today you would earn a total of  17,500  from holding IQuest Co or generate 8.41% return on investment over 90 days.

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

IQuest Co  vs.  Samsung Electronics Co

IQuest Co

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in IQuest Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, IQuest Co may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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 weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with IQuest Co and Samsung Electronics

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

The idea behind IQuest Co and Samsung Electronics 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.