Correlation Between Samsung Electronics and Ssangyong Materials
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Ssangyong Materials 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 Ssangyong Materials 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 Ssangyong Materials Corp, you can compare the effects of market volatilities on Samsung Electronics and Ssangyong Materials 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 Ssangyong Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Ssangyong Materials.
Diversification Opportunities for Samsung Electronics and Ssangyong Materials
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Samsung and Ssangyong is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Ssangyong Materials Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ssangyong Materials Corp 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 Ssangyong Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ssangyong Materials Corp has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Ssangyong Materials go up and down completely randomly.
Pair Corralation between Samsung Electronics and Ssangyong Materials
Assuming the 90 days trading horizon Samsung Electronics Co is expected to generate 0.71 times more return on investment than Ssangyong Materials. However, Samsung Electronics Co is 1.41 times less risky than Ssangyong Materials. It trades about 0.19 of its potential returns per unit of risk. Ssangyong Materials Corp is currently generating about 0.08 per unit of risk. If you would invest 5,060,000 in Samsung Electronics Co on September 14, 2024 and sell it today you would earn a total of 530,000 from holding Samsung Electronics Co or generate 10.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. Ssangyong Materials Corp
Performance |
| Timeline |
| Samsung Electronics |
| Ssangyong Materials Corp |
Samsung Electronics and Ssangyong Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Ssangyong Materials
The main advantage of trading using opposite Samsung Electronics and Ssangyong Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Ssangyong Materials 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 Ssangyong Materials will offset losses from the drop in Ssangyong Materials' long position.| Samsung Electronics vs. Anam Electronics Co | Samsung Electronics vs. Daejoo Electronic Materials | Samsung Electronics vs. CG Hi Tech | Samsung Electronics vs. Samsung Electronics Co |
| Ssangyong Materials vs. Samsung Electronics Co | Ssangyong Materials vs. Samsung Electronics Co | Ssangyong Materials vs. SK Hynix | Ssangyong Materials vs. POSCO Holdings |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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