Correlation Between Samsung Electronics and SOLiD
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and SOLiD 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 SOLiD 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 SOLiD Inc, you can compare the effects of market volatilities on Samsung Electronics and SOLiD 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 SOLiD. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and SOLiD.
Diversification Opportunities for Samsung Electronics and SOLiD
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Samsung and SOLiD is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and SOLiD Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOLiD Inc 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 SOLiD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOLiD Inc has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and SOLiD go up and down completely randomly.
Pair Corralation between Samsung Electronics and SOLiD
Assuming the 90 days trading horizon Samsung Electronics is expected to generate 1.12 times less return on investment than SOLiD. But when comparing it to its historical volatility, Samsung Electronics Co is 1.26 times less risky than SOLiD. It trades about 0.19 of its potential returns per unit of risk. SOLiD Inc is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 478,500 in SOLiD Inc on September 14, 2024 and sell it today you would earn a total of 54,500 from holding SOLiD Inc or generate 11.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. SOLiD Inc
Performance |
| Timeline |
| Samsung Electronics |
| SOLiD Inc |
Samsung Electronics and SOLiD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and SOLiD
The main advantage of trading using opposite Samsung Electronics and SOLiD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, SOLiD 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 SOLiD will offset losses from the drop in SOLiD's 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 |
| SOLiD vs. Cube Entertainment | SOLiD vs. Dreamus Company | SOLiD vs. LG Energy Solution | SOLiD vs. Dongwon System |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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