Correlation Between Samsung Electronics and Informa Plc

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

Diversification Opportunities for Samsung Electronics and Informa Plc

-0.31

Correlation Coefficient

Samsung Electronics  Informa Plc

Very good diversification

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

Pair Corralation between Samsung Electronics and Informa Plc

Assuming the 90 days horizon Samsung Electronics is expected to generate 4.3 times less return on investment than Informa Plc. But when comparing it to its historical volatility, Samsung Electronics Co is 34.53 times less risky than Informa Plc. It trades about 0.13 of its potential returns per unit of risk. Informa plc is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,105  in Informa plc on September 12, 2024 and sell it today you would earn a total of  3.00  from holding Informa plc or generate 0.27% return on investment over 90 days.

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

Samsung Electronics Co  vs.  Informa plc

Samsung Electronics

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Samsung Electronics Co are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable essential indicators, Samsung Electronics is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Informa plc

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Informa plc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable forward-looking indicators, Informa Plc is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Samsung Electronics and Informa Plc

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

The idea behind Samsung Electronics Co and Informa plc 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.