Correlation Between Samsung Electronics and KyungIn Electronics

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

Diversification Opportunities for Samsung Electronics and KyungIn Electronics

0.26

Correlation Coefficient

Samsung Electronics  KyungIn Electronics

Modest diversification

The 3 months correlation between Samsung and KyungIn is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and KyungIn Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KyungIn Electronics 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 KyungIn Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KyungIn Electronics has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and KyungIn Electronics go up and down completely randomly.

Pair Corralation between Samsung Electronics and KyungIn Electronics

Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the KyungIn Electronics. In addition to that, Samsung Electronics is 1.14 times more volatile than KyungIn Electronics Co. It trades about -0.12 of its total potential returns per unit of risk. KyungIn Electronics Co is currently generating about 0.06 per unit of volatility. If you would invest  2,075,000  in KyungIn Electronics Co on September 12, 2024 and sell it today you would earn a total of  115,000  from holding KyungIn Electronics Co or generate 5.54% return on investment over 90 days.

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

Samsung Electronics Co  vs.  KyungIn Electronics Co

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.

KyungIn Electronics

Risk-Adjusted Performance

4 of 100

Insignificant

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

Pair Trading with Samsung Electronics and KyungIn Electronics

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

The idea behind Samsung Electronics Co and KyungIn 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.

Check out your portfolio center.

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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.