Correlation Between Samsung Electronics and Kukdo Chemical
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Kukdo Chemical 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 Kukdo Chemical 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 Kukdo Chemical, you can compare the effects of market volatilities on Samsung Electronics and Kukdo Chemical 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 Kukdo Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Kukdo Chemical.
Diversification Opportunities for Samsung Electronics and Kukdo Chemical
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Samsung and Kukdo is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Kukdo Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kukdo Chemical 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 Kukdo Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kukdo Chemical has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Kukdo Chemical go up and down completely randomly.
Pair Corralation between Samsung Electronics and Kukdo Chemical
Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the Kukdo Chemical. In addition to that, Samsung Electronics is 1.19 times more volatile than Kukdo Chemical. It trades about -0.14 of its total potential returns per unit of risk. Kukdo Chemical is currently generating about -0.12 per unit of volatility. If you would invest 3,195,000 in Kukdo Chemical on September 12, 2024 and sell it today you would lose (445,000) from holding Kukdo Chemical or give up 13.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. Kukdo Chemical
Performance |
| Timeline |
| Samsung Electronics |
| Kukdo Chemical |
Samsung Electronics and Kukdo Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Kukdo Chemical
The main advantage of trading using opposite Samsung Electronics and Kukdo Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Kukdo Chemical 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 Kukdo Chemical will offset losses from the drop in Kukdo Chemical's long position.| Samsung Electronics vs. Korea Air Svc | Samsung Electronics vs. Display Tech Co | Samsung Electronics vs. PLAYWITH | Samsung Electronics vs. Chorokbaem Healthcare Co |
| Kukdo Chemical vs. Lotte Data Communication | Kukdo Chemical vs. KT Submarine Telecom | Kukdo Chemical vs. Seoul Food Industrial | Kukdo Chemical vs. Hankukpackage 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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