Correlation Between Information Services and Samsung Electronics

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

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

Diversification Opportunities for Information Services and Samsung Electronics

0.19

Correlation Coefficient

Information Services  Samsung Electronics

Average diversification

The 3 months correlation between Information and Samsung is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Information Services Internati and Samsung Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung Electronics and Information Services 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 Information Services International Dentsu are associated (or correlated) with Samsung Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samsung Electronics has no effect on the direction of Information Services i.e., Information Services and Samsung Electronics go up and down completely randomly.

Pair Corralation between Information Services and Samsung Electronics

Assuming the 90 days horizon Information Services International Dentsu is expected to generate 1.02 times more return on investment than Samsung Electronics. However, Information Services is 1.02 times more volatile than Samsung Electronics Co. It trades about 0.08 of its potential returns per unit of risk. Samsung Electronics Co is currently generating about 0.07 per unit of risk. If you would invest  3,540  in Information Services International Dentsu on December 25, 2024 and sell it today you would earn a total of  300.00  from holding Information Services International Dentsu or generate 8.47% return on investment over 90 days.

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

Information Services Internati  vs.  Samsung Electronics Co

Information Services

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Information Services International Dentsu are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Information Services may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Samsung Electronics

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Samsung Electronics Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Samsung Electronics may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Information Services and Samsung Electronics

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

The idea behind Information Services International Dentsu and Samsung Electronics 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.