Correlation Between Samsung Electronics and Bank of Ireland

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

Diversification Opportunities for Samsung Electronics and Bank of Ireland

-0.49

Correlation Coefficient

Samsung Electronics  Bank of Ireland

Very good diversification

The 3 months correlation between Samsung and Bank is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Bank of Ireland in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank of Ireland 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 Bank of Ireland. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank of Ireland has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Bank of Ireland go up and down completely randomly.

Pair Corralation between Samsung Electronics and Bank of Ireland

Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the Bank of Ireland. In addition to that, Samsung Electronics is 1.07 times more volatile than Bank of Ireland. It trades about -0.04 of its total potential returns per unit of risk. Bank of Ireland is currently generating about 0.13 per unit of volatility. If you would invest  860.00  in Bank of Ireland on November 20, 2024 and sell it today you would earn a total of  114.00  from holding Bank of Ireland or generate 13.26% return on investment over 90 days.

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

Samsung Electronics Co  vs.  Bank of Ireland

Samsung Electronics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Samsung Electronics Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Samsung Electronics is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Bank of Ireland

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Bank of Ireland are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Bank of Ireland unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Samsung Electronics and Bank of Ireland

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

The idea behind Samsung Electronics Co and Bank of Ireland 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.