Correlation Between Samsung Electronics and Automobile
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Automobile 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 Automobile 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 Automobile Pc, you can compare the effects of market volatilities on Samsung Electronics and Automobile 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 Automobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Automobile.
Diversification Opportunities for Samsung Electronics and Automobile
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Samsung and Automobile is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Automobile Pc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Automobile Pc 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 Automobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Automobile Pc has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Automobile go up and down completely randomly.
Pair Corralation between Samsung Electronics and Automobile
Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the Automobile. But the stock apears to be less risky and, when comparing its historical volatility, Samsung Electronics Co is 1.5 times less risky than Automobile. The stock trades about -0.34 of its potential returns per unit of risk. The Automobile Pc is currently generating about -0.21 of returns per unit of risk over similar time horizon. If you would invest 59,500 in Automobile Pc on November 6, 2024 and sell it today you would lose (4,900) from holding Automobile Pc or give up 8.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. Automobile Pc
Performance |
| Timeline |
| Samsung Electronics |
| Automobile Pc |
Samsung Electronics and Automobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Automobile
The main advantage of trading using opposite Samsung Electronics and Automobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Automobile 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 Automobile will offset losses from the drop in Automobile's long position.| Samsung Electronics vs. Hyundai Green Food | Samsung Electronics vs. Samyang Foods Co | Samsung Electronics vs. Finebesteel | Samsung Electronics vs. Husteel |
| Automobile vs. SEOJEON ELECTRIC MACHINERY | Automobile vs. Seohee Construction Co | Automobile vs. GS Engineering Construction | Automobile vs. Dongbang Ship Machinery |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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