Correlation Between Samsung Electronics and POSCO Holdings
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and POSCO Holdings 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 POSCO Holdings 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 POSCO Holdings, you can compare the effects of market volatilities on Samsung Electronics and POSCO Holdings 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 POSCO Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and POSCO Holdings.
Diversification Opportunities for Samsung Electronics and POSCO Holdings
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Samsung and POSCO is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and POSCO Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on POSCO Holdings 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 POSCO Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of POSCO Holdings has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and POSCO Holdings go up and down completely randomly.
Pair Corralation between Samsung Electronics and POSCO Holdings
Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the POSCO Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Samsung Electronics Co is 1.14 times less risky than POSCO Holdings. The stock trades about -0.17 of its potential returns per unit of risk. The POSCO Holdings is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 26,200,000 in POSCO Holdings on November 7, 2024 and sell it today you would lose (150,000) from holding POSCO Holdings or give up 0.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 89.47% |
| Values | Daily Returns |
Samsung Electronics Co vs. POSCO Holdings
Performance |
| Timeline |
| Samsung Electronics |
| POSCO Holdings |
Samsung Electronics and POSCO Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and POSCO Holdings
The main advantage of trading using opposite Samsung Electronics and POSCO Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, POSCO Holdings 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 POSCO Holdings will offset losses from the drop in POSCO Holdings' long position.| Samsung Electronics vs. SK Chemicals Co | Samsung Electronics vs. LAKE MATERIALS LTD | Samsung Electronics vs. TK Chemical | Samsung Electronics vs. SAMG Entertainment Co |
| POSCO Holdings vs. Dongil Technology | POSCO Holdings vs. KG Eco Technology | POSCO Holdings vs. Puloon Technology | POSCO Holdings vs. SK Chemicals Co |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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