Correlation Between Samsung Electronics and AeroSpace Technology
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and AeroSpace 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 AeroSpace 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 AeroSpace Technology of, you can compare the effects of market volatilities on Samsung Electronics and AeroSpace 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 AeroSpace Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and AeroSpace Technology.
Diversification Opportunities for Samsung Electronics and AeroSpace Technology
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Samsung and AeroSpace is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and AeroSpace Technology of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AeroSpace 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 AeroSpace Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AeroSpace Technology has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and AeroSpace Technology go up and down completely randomly.
Pair Corralation between Samsung Electronics and AeroSpace Technology
Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the AeroSpace Technology. But the stock apears to be less risky and, when comparing its historical volatility, Samsung Electronics Co is 1.08 times less risky than AeroSpace Technology. The stock trades about -0.02 of its potential returns per unit of risk. The AeroSpace Technology of is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 53,200 in AeroSpace Technology of on October 25, 2024 and sell it today you would earn a total of 22,500 from holding AeroSpace Technology of or generate 42.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. AeroSpace Technology of
Performance |
| Timeline |
| Samsung Electronics |
| AeroSpace Technology |
Samsung Electronics and AeroSpace Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and AeroSpace Technology
The main advantage of trading using opposite Samsung Electronics and AeroSpace Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, AeroSpace 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 AeroSpace Technology will offset losses from the drop in AeroSpace Technology's long position.| Samsung Electronics vs. Kbi Metal Co | Samsung Electronics vs. Jahwa Electronics Co | Samsung Electronics vs. Heungkuk Metaltech CoLtd | Samsung Electronics vs. Shinhan Inverse Copper |
| AeroSpace Technology vs. Samsung Electronics Co | AeroSpace Technology vs. Samsung Electronics Co | AeroSpace Technology vs. KB Financial Group | AeroSpace Technology vs. Shinhan Financial Group |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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