Correlation Between Samsung Electronics and Samlip General
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Samlip General 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 Samlip General 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 Samlip General Foods, you can compare the effects of market volatilities on Samsung Electronics and Samlip General 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 Samlip General. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Samlip General.
Diversification Opportunities for Samsung Electronics and Samlip General
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Samsung and Samlip is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Samlip General Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samlip General Foods 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 Samlip General. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samlip General Foods has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Samlip General go up and down completely randomly.
Pair Corralation between Samsung Electronics and Samlip General
Assuming the 90 days trading horizon Samsung Electronics Co is expected to generate 1.45 times more return on investment than Samlip General. However, Samsung Electronics is 1.45 times more volatile than Samlip General Foods. It trades about -0.02 of its potential returns per unit of risk. Samlip General Foods is currently generating about -0.08 per unit of risk. If you would invest 6,498,691 in Samsung Electronics Co on September 12, 2024 and sell it today you would lose (1,098,691) from holding Samsung Electronics Co or give up 16.91% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. Samlip General Foods
Performance |
| Timeline |
| Samsung Electronics |
| Samlip General Foods |
Samsung Electronics and Samlip General Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Samlip General
The main advantage of trading using opposite Samsung Electronics and Samlip General positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Samlip General 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 Samlip General will offset losses from the drop in Samlip General's long position.| Samsung Electronics vs. Cube Entertainment | Samsung Electronics vs. Dreamus Company | Samsung Electronics vs. LG Energy Solution | Samsung Electronics vs. Dongwon System |
| Samlip General vs. Samsung Electronics Co | Samlip General vs. Samsung Electronics Co | Samlip General vs. SK Hynix | Samlip General vs. POSCO Holdings |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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