Correlation Between Samsung Electronics and Namhae Chemical
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Namhae 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 Namhae 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 Namhae Chemical, you can compare the effects of market volatilities on Samsung Electronics and Namhae 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 Namhae Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Namhae Chemical.
Diversification Opportunities for Samsung Electronics and Namhae Chemical
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Samsung and Namhae is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Namhae Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Namhae 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 Namhae Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Namhae Chemical has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Namhae Chemical go up and down completely randomly.
Pair Corralation between Samsung Electronics and Namhae Chemical
Assuming the 90 days trading horizon Samsung Electronics Co is expected to generate 2.86 times more return on investment than Namhae Chemical. However, Samsung Electronics is 2.86 times more volatile than Namhae Chemical. It trades about 0.02 of its potential returns per unit of risk. Namhae Chemical is currently generating about -0.06 per unit of risk. If you would invest 5,810,000 in Samsung Electronics Co on August 29, 2024 and sell it today you would earn a total of 20,000 from holding Samsung Electronics Co or generate 0.34% 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. Namhae Chemical
Performance |
| Timeline |
| Samsung Electronics |
| Namhae Chemical |
Samsung Electronics and Namhae Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Namhae Chemical
The main advantage of trading using opposite Samsung Electronics and Namhae Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Namhae 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 Namhae Chemical will offset losses from the drop in Namhae Chemical's long position.| Samsung Electronics vs. Chin Yang Chemical | Samsung Electronics vs. Dongbang Transport Logistics | Samsung Electronics vs. Shinhan Inverse Silver | Samsung Electronics vs. JC Chemical Co |
| Namhae Chemical vs. Ssangyong Information Communication | Namhae Chemical vs. Daedong Metals Co | Namhae Chemical vs. Dongil Metal Co | Namhae Chemical vs. Hanjoo Light Metal |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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