Correlation Between Samsung Electronics and Keyang Electric
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Keyang Electric 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 Keyang Electric 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 Keyang Electric Machinery, you can compare the effects of market volatilities on Samsung Electronics and Keyang Electric 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 Keyang Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Keyang Electric.
Diversification Opportunities for Samsung Electronics and Keyang Electric
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Samsung and Keyang is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Keyang Electric Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keyang Electric Machinery 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 Keyang Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keyang Electric Machinery has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Keyang Electric go up and down completely randomly.
Pair Corralation between Samsung Electronics and Keyang Electric
Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the Keyang Electric. In addition to that, Samsung Electronics is 1.31 times more volatile than Keyang Electric Machinery. It trades about -0.21 of its total potential returns per unit of risk. Keyang Electric Machinery is currently generating about -0.06 per unit of volatility. If you would invest 398,500 in Keyang Electric Machinery on September 2, 2024 and sell it today you would lose (29,500) from holding Keyang Electric Machinery or give up 7.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. Keyang Electric Machinery
Performance |
| Timeline |
| Samsung Electronics |
| Keyang Electric Machinery |
Samsung Electronics and Keyang Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Keyang Electric
The main advantage of trading using opposite Samsung Electronics and Keyang Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Keyang Electric 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 Keyang Electric will offset losses from the drop in Keyang Electric's long position.| Samsung Electronics vs. Polaris Office Corp | Samsung Electronics vs. Lotte Data Communication | Samsung Electronics vs. Hankook Furniture Co | Samsung Electronics vs. Daou Data Corp |
| Keyang Electric vs. Busan Industrial Co | Keyang Electric vs. Busan Ind | Keyang Electric vs. Mirae Asset Daewoo | Keyang Electric vs. Finebesteel |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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