Correlation Between Samsung Electronics and Han Kook

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

Diversification Opportunities for Samsung Electronics and Han Kook

0.34

Correlation Coefficient

Samsung Electronics  Han Kook

Weak diversification

The 3 months correlation between Samsung and Han is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Han Kook Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Han Kook Capital 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 Han Kook. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Han Kook Capital has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Han Kook go up and down completely randomly.

Pair Corralation between Samsung Electronics and Han Kook

Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the Han Kook. In addition to that, Samsung Electronics is 1.78 times more volatile than Han Kook Capital. It trades about 0.0 of its total potential returns per unit of risk. Han Kook Capital is currently generating about 0.13 per unit of volatility. If you would invest  52,055  in Han Kook Capital on December 1, 2024 and sell it today you would earn a total of  4,145  from holding Han Kook Capital or generate 7.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.31%
Values	Daily Returns

Samsung Electronics Co  vs.  Han Kook Capital

Samsung Electronics

Risk-Adjusted Performance

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 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.

Han Kook Capital

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Han Kook Capital are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Han Kook may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Samsung Electronics and Han Kook

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

The idea behind Samsung Electronics Co and Han Kook Capital 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.