Correlation Between Samsung Electronics and Sungdo Engineering
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Sungdo Engineering 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 Sungdo Engineering 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 Sungdo Engineering Construction, you can compare the effects of market volatilities on Samsung Electronics and Sungdo Engineering 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 Sungdo Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Sungdo Engineering.
Diversification Opportunities for Samsung Electronics and Sungdo Engineering
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Samsung and Sungdo is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Sungdo Engineering Constructio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sungdo Engineering 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 Sungdo Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sungdo Engineering has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Sungdo Engineering go up and down completely randomly.
Pair Corralation between Samsung Electronics and Sungdo Engineering
Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the Sungdo Engineering. In addition to that, Samsung Electronics is 1.08 times more volatile than Sungdo Engineering Construction. It trades about -0.12 of its total potential returns per unit of risk. Sungdo Engineering Construction is currently generating about -0.11 per unit of volatility. If you would invest 461,500 in Sungdo Engineering Construction on September 1, 2024 and sell it today you would lose (31,500) from holding Sungdo Engineering Construction or give up 6.83% 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. Sungdo Engineering Constructio
Performance |
| Timeline |
| Samsung Electronics |
| Sungdo Engineering |
Samsung Electronics and Sungdo Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Sungdo Engineering
The main advantage of trading using opposite Samsung Electronics and Sungdo Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Sungdo Engineering 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 Sungdo Engineering will offset losses from the drop in Sungdo Engineering's long position.| Samsung Electronics vs. Konan Technology | Samsung Electronics vs. Orbitech Co | Samsung Electronics vs. Netmarble Games Corp | Samsung Electronics vs. Golden Bridge Investment |
| Sungdo Engineering vs. Korea New Network | Sungdo Engineering vs. ICD Co | Sungdo Engineering vs. DYPNF CoLtd | Sungdo Engineering vs. Busan Industrial 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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