Correlation Between Samsung Card and Korea Gas

Can any of the company-specific risk be diversified away by investing in both Samsung Card and Korea Gas 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 Card and Korea Gas into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Samsung Card Co and Korea Gas, you can compare the effects of market volatilities on Samsung Card and Korea Gas 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 Card with a short position of Korea Gas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Card and Korea Gas.

Diversification Opportunities for Samsung Card and Korea Gas

0.39

Correlation Coefficient

Samsung Card  Korea Gas

Weak diversification

The 3 months correlation between Samsung and Korea is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Card Co and Korea Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Gas and Samsung Card 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 Card Co are associated (or correlated) with Korea Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Gas has no effect on the direction of Samsung Card i.e., Samsung Card and Korea Gas go up and down completely randomly.

Pair Corralation between Samsung Card and Korea Gas

Assuming the 90 days trading horizon Samsung Card Co is expected to generate 0.37 times more return on investment than Korea Gas. However, Samsung Card Co is 2.68 times less risky than Korea Gas. It trades about 0.0 of its potential returns per unit of risk. Korea Gas is currently generating about -0.09 per unit of risk. If you would invest  4,115,000  in Samsung Card Co on September 28, 2024 and sell it today you would lose (20,000) from holding Samsung Card Co or give up 0.49% of portfolio value over 90 days.

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

Samsung Card Co  vs.  Korea Gas

Samsung Card

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Samsung Card Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Samsung Card is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Korea Gas

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Korea Gas 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.

Pair Trading with Samsung Card and Korea Gas

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

The idea behind Samsung Card Co and Korea Gas 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.