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

0.8

Correlation Coefficient

Samsung Electronics  K3 Business

Very poor diversification

The 3 months correlation between Samsung and KBT is 0.8. 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 under-perform the K3 Business. In addition to that, Samsung Electronics is 1.94 times more volatile than K3 Business Technology. It trades about -0.21 of its total potential returns per unit of risk. K3 Business Technology is currently generating about -0.17 per unit of volatility. If you would invest  7,100  in K3 Business Technology on August 31, 2024 and sell it today you would lose (950.00) from holding K3 Business Technology or give up 13.38% 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.  K3 Business Technology

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. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

K3 Business Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days K3 Business Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in December 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

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.

The idea behind Samsung Electronics Co and K3 Business Technology 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.