Correlation Between Samsung Electronics and Leaders Technology
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Leaders Technology 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 Leaders Technology 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 Leaders Technology Investment, you can compare the effects of market volatilities on Samsung Electronics and Leaders Technology 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 Leaders Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Leaders Technology.
Diversification Opportunities for Samsung Electronics and Leaders Technology
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Samsung and Leaders is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Leaders Technology Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leaders Technology 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 Leaders Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leaders Technology has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Leaders Technology go up and down completely randomly.
Pair Corralation between Samsung Electronics and Leaders Technology
Assuming the 90 days trading horizon Samsung Electronics Co is expected to generate 0.44 times more return on investment than Leaders Technology. However, Samsung Electronics Co is 2.25 times less risky than Leaders Technology. It trades about 0.01 of its potential returns per unit of risk. Leaders Technology Investment is currently generating about -0.1 per unit of risk. If you would invest 5,370,000 in Samsung Electronics Co on October 28, 2024 and sell it today you would earn a total of 0.00 from holding Samsung Electronics Co or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. Leaders Technology Investment
Performance |
| Timeline |
| Samsung Electronics |
| Leaders Technology |
Samsung Electronics and Leaders Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Leaders Technology
The main advantage of trading using opposite Samsung Electronics and Leaders Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Leaders Technology 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 Leaders Technology will offset losses from the drop in Leaders Technology's long position.| Samsung Electronics vs. Samsung Electronics Co | Samsung Electronics vs. SK Hynix | Samsung Electronics vs. HMM Co | Samsung Electronics vs. Kia Corp |
| Leaders Technology vs. Samsung Electronics Co | Leaders Technology vs. Samsung Electronics Co | Leaders Technology vs. SK Hynix | Leaders Technology vs. HMM 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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