Correlation Between Samsung Electronics and Induction Healthcare

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

Diversification Opportunities for Samsung Electronics and Induction Healthcare

-0.3

Correlation Coefficient

Samsung Electronics  Induction Healthcare

Very good diversification

The 3 months correlation between Samsung and Induction is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Induction Healthcare Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Induction Healthcare 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 Induction Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Induction Healthcare has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Induction Healthcare go up and down completely randomly.

Pair Corralation between Samsung Electronics and Induction Healthcare

Assuming the 90 days trading horizon Samsung Electronics Co is expected to generate 0.83 times more return on investment than Induction Healthcare. However, Samsung Electronics Co is 1.2 times less risky than Induction Healthcare. It trades about -0.04 of its potential returns per unit of risk. Induction Healthcare Group is currently generating about -0.2 per unit of risk. If you would invest  81,500  in Samsung Electronics Co on November 30, 2024 and sell it today you would lose (4,600) from holding Samsung Electronics Co or give up 5.64% of portfolio value over 90 days.

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

Samsung Electronics Co  vs.  Induction Healthcare Group

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 latest stock price uproar, may contribute to short-horizon losses for the private investors.

Induction Healthcare

Risk-Adjusted Performance

Very Weak

Over the last 90 days Induction Healthcare Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in March 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Samsung Electronics and Induction Healthcare

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

The idea behind Samsung Electronics Co and Induction Healthcare Group 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.