Correlation Between Samsung Electronics and Wonik Ips

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

Diversification Opportunities for Samsung Electronics and Wonik Ips

0.65

Correlation Coefficient

Samsung Electronics  Wonik Ips

Poor diversification

The 3 months correlation between Samsung and Wonik is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Wonik Ips Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wonik Ips 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 Wonik Ips. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wonik Ips has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Wonik Ips go up and down completely randomly.

Pair Corralation between Samsung Electronics and Wonik Ips

Assuming the 90 days trading horizon Samsung Electronics is expected to generate 4.95 times less return on investment than Wonik Ips. But when comparing it to its historical volatility, Samsung Electronics Co is 1.52 times less risky than Wonik Ips. It trades about 0.01 of its potential returns per unit of risk. Wonik Ips Co is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  2,400,000  in Wonik Ips Co on December 10, 2024 and sell it today you would earn a total of  35,000  from holding Wonik Ips Co or generate 1.46% return on investment over 90 days.

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

Samsung Electronics Co  vs.  Wonik Ips Co

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 1 (%) 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.

Wonik Ips

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Wonik Ips Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Wonik Ips sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Samsung Electronics and Wonik Ips

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

The idea behind Samsung Electronics Co and Wonik Ips 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.

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