Correlation Between Samsung Electronics and InBody CoLtd

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

Diversification Opportunities for Samsung Electronics and InBody CoLtd

0.03

Correlation Coefficient

Samsung Electronics  InBody CoLtd

Significant diversification

The 3 months correlation between Samsung and InBody is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and InBody CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InBody CoLtd 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 InBody CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InBody CoLtd has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and InBody CoLtd go up and down completely randomly.

Pair Corralation between Samsung Electronics and InBody CoLtd

Assuming the 90 days trading horizon Samsung Electronics Co is expected to generate 0.95 times more return on investment than InBody CoLtd. However, Samsung Electronics Co is 1.06 times less risky than InBody CoLtd. It trades about 0.12 of its potential returns per unit of risk. InBody CoLtd is currently generating about -0.02 per unit of risk. If you would invest  4,420,000  in Samsung Electronics Co on December 30, 2024 and sell it today you would earn a total of  540,000  from holding Samsung Electronics Co or generate 12.22% return on investment over 90 days.

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

Samsung Electronics Co  vs.  InBody CoLtd

Samsung Electronics

Risk-Adjusted Performance

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 somewhat weak basic indicators, Samsung Electronics sustained solid returns over the last few months and may actually be approaching a breakup point.

InBody CoLtd

Risk-Adjusted Performance

Very Weak

Over the last 90 days InBody CoLtd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, InBody CoLtd 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 InBody CoLtd

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

The idea behind Samsung Electronics Co and InBody CoLtd 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.