Correlation Between Samsung Electronics and Hiscox

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

Diversification Opportunities for Samsung Electronics and Hiscox

0.28

Correlation Coefficient

Samsung Electronics  Hiscox

Modest diversification

The 3 months correlation between Samsung and Hiscox is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Hiscox in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hiscox 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 Hiscox. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hiscox has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Hiscox go up and down completely randomly.

Pair Corralation between Samsung Electronics and Hiscox

Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the Hiscox. In addition to that, Samsung Electronics is 1.79 times more volatile than Hiscox. It trades about -0.08 of its total potential returns per unit of risk. Hiscox is currently generating about -0.01 per unit of volatility. If you would invest  112,300  in Hiscox on October 10, 2024 and sell it today you would lose (1,400) from holding Hiscox or give up 1.25% of portfolio value over 90 days.

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

Samsung Electronics Co  vs.  Hiscox

Samsung Electronics

Risk-Adjusted Performance

0 of 100

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 latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Hiscox

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hiscox has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Hiscox is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Samsung Electronics and Hiscox

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

The idea behind Samsung Electronics Co and Hiscox 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.