Correlation Between Songwon Industrial and Samsung Electronics
Can any of the company-specific risk be diversified away by investing in both Songwon Industrial 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 Songwon Industrial and Samsung Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Songwon Industrial Co and Samsung Electronics Co, you can compare the effects of market volatilities on Songwon Industrial 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 Songwon Industrial with a short position of Samsung Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Songwon Industrial and Samsung Electronics.
Diversification Opportunities for Songwon Industrial and Samsung Electronics
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Songwon and Samsung is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Songwon Industrial Co and Samsung Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung Electronics and Songwon Industrial 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 Songwon Industrial Co 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 Songwon Industrial i.e., Songwon Industrial and Samsung Electronics go up and down completely randomly.
Pair Corralation between Songwon Industrial and Samsung Electronics
Assuming the 90 days trading horizon Songwon Industrial Co is expected to under-perform the Samsung Electronics. But the stock apears to be less risky and, when comparing its historical volatility, Songwon Industrial Co is 1.04 times less risky than Samsung Electronics. The stock trades about -0.11 of its potential returns per unit of risk. The Samsung Electronics Co is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 4,475,000 in Samsung Electronics Co on September 13, 2024 and sell it today you would earn a total of 75,000 from holding Samsung Electronics Co or generate 1.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Songwon Industrial Co vs. Samsung Electronics Co
Performance |
| Timeline |
| Songwon Industrial |
| Samsung Electronics |
Songwon Industrial and Samsung Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Songwon Industrial and Samsung Electronics
The main advantage of trading using opposite Songwon Industrial and Samsung Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Songwon Industrial 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.| Songwon Industrial vs. Samsung Electronics Co | Songwon Industrial vs. Samsung Electronics Co | Songwon Industrial vs. SK Hynix | Songwon Industrial vs. POSCO Holdings |
| Samsung Electronics vs. LG Corp | Samsung Electronics vs. Solution Advanced Technology | Samsung Electronics vs. Busan Industrial Co | Samsung Electronics vs. Busan Ind |
Check out your portfolio center.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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
Other Complementary Tools
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments |