Correlation Between Samsung Electronics and Hwangkum Steel

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

Diversification Opportunities for Samsung Electronics and Hwangkum Steel

0.49

Correlation Coefficient

Samsung Electronics  Hwangkum Steel

Very weak diversification

The 3 months correlation between Samsung and Hwangkum is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Hwangkum Steel Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hwangkum Steel 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 Hwangkum Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hwangkum Steel Technology has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Hwangkum Steel go up and down completely randomly.

Pair Corralation between Samsung Electronics and Hwangkum Steel

Assuming the 90 days trading horizon Samsung Electronics Co is expected to generate 1.37 times more return on investment than Hwangkum Steel. However, Samsung Electronics is 1.37 times more volatile than Hwangkum Steel Technology. It trades about 0.03 of its potential returns per unit of risk. Hwangkum Steel Technology is currently generating about 0.02 per unit of risk. If you would invest  5,323,700  in Samsung Electronics Co on December 3, 2024 and sell it today you would earn a total of  126,300  from holding Samsung Electronics Co or generate 2.37% return on investment over 90 days.

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

Samsung Electronics Co  vs.  Hwangkum Steel Technology

Samsung Electronics

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Samsung Electronics Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Samsung Electronics is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Hwangkum Steel Technology

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hwangkum Steel Technology are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Hwangkum Steel 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 Electronics and Hwangkum Steel

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

The idea behind Samsung Electronics Co and Hwangkum Steel 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.