Correlation Between Samsung Electronics and Intermediate Capital

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

Diversification Opportunities for Samsung Electronics and Intermediate Capital

0.24

Correlation Coefficient

Samsung Electronics  Intermediate Capital

Modest diversification

The 3 months correlation between Samsung and Intermediate is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Intermediate Capital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intermediate Capital 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 Intermediate Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intermediate Capital has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Intermediate Capital go up and down completely randomly.

Pair Corralation between Samsung Electronics and Intermediate Capital

Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the Intermediate Capital. In addition to that, Samsung Electronics is 1.33 times more volatile than Intermediate Capital Group. It trades about -0.22 of its total potential returns per unit of risk. Intermediate Capital Group is currently generating about 0.09 per unit of volatility. If you would invest  202,945  in Intermediate Capital Group on September 27, 2024 and sell it today you would earn a total of  5,055  from holding Intermediate Capital Group or generate 2.49% return on investment over 90 days.

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

Samsung Electronics Co  vs.  Intermediate Capital Group

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 unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Intermediate Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intermediate Capital Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Samsung Electronics and Intermediate Capital

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

The idea behind Samsung Electronics Co and Intermediate Capital 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.