Correlation Between Samsung Life and Samsung Securities

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

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

Diversification Opportunities for Samsung Life and Samsung Securities

0.46

Correlation Coefficient

Samsung Life  Samsung Securities

Very weak diversification

The 3 months correlation between Samsung and Samsung is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Life Insurance and Samsung Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung Securities and Samsung Life 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 Life Insurance are associated (or correlated) with Samsung Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samsung Securities has no effect on the direction of Samsung Life i.e., Samsung Life and Samsung Securities go up and down completely randomly.

Pair Corralation between Samsung Life and Samsung Securities

Assuming the 90 days trading horizon Samsung Life Insurance is expected to generate 1.49 times more return on investment than Samsung Securities. However, Samsung Life is 1.49 times more volatile than Samsung Securities. It trades about 0.06 of its potential returns per unit of risk. Samsung Securities is currently generating about 0.0 per unit of risk. If you would invest  10,050,000  in Samsung Life Insurance on September 3, 2024 and sell it today you would earn a total of  660,000  from holding Samsung Life Insurance or generate 6.57% return on investment over 90 days.

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

Samsung Life Insurance  vs.  Samsung Securities

Samsung Life Insurance

Risk-Adjusted Performance

4 of 100

Insignificant

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

Samsung Securities

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind Samsung Life Insurance and Samsung Securities 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.