Correlation Between Samsung Electronics and Woorim Machinery
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Woorim Machinery 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 Woorim Machinery 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 Woorim Machinery Co, you can compare the effects of market volatilities on Samsung Electronics and Woorim Machinery 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 Woorim Machinery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Woorim Machinery.
Diversification Opportunities for Samsung Electronics and Woorim Machinery
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Samsung and Woorim is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Woorim Machinery Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Woorim Machinery 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 Woorim Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Woorim Machinery has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Woorim Machinery go up and down completely randomly.
Pair Corralation between Samsung Electronics and Woorim Machinery
Assuming the 90 days trading horizon Samsung Electronics is expected to generate 10.68 times less return on investment than Woorim Machinery. In addition to that, Samsung Electronics is 1.11 times more volatile than Woorim Machinery Co. It trades about 0.01 of its total potential returns per unit of risk. Woorim Machinery Co is currently generating about 0.09 per unit of volatility. If you would invest 516,000 in Woorim Machinery Co on August 28, 2024 and sell it today you would earn a total of 24,000 from holding Woorim Machinery Co or generate 4.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. Woorim Machinery Co
Performance |
| Timeline |
| Samsung Electronics |
| Woorim Machinery |
Samsung Electronics and Woorim Machinery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Woorim Machinery
The main advantage of trading using opposite Samsung Electronics and Woorim Machinery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Woorim Machinery 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 Woorim Machinery will offset losses from the drop in Woorim Machinery's long position.| Samsung Electronics vs. Lotte Fine Chemical | Samsung Electronics vs. SH Energy Chemical | Samsung Electronics vs. Hansol Chemical Co | Samsung Electronics vs. Youngchang Chemical Co |
| Woorim Machinery vs. MediaZen | Woorim Machinery vs. Daewon Media Co | Woorim Machinery vs. Dong A Steel Technology | Woorim Machinery vs. Fine Besteel 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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