Correlation Between Samsung Electronics and Hironic Co
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Hironic Co 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 Hironic Co 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 Hironic Co, you can compare the effects of market volatilities on Samsung Electronics and Hironic Co 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 Hironic Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Hironic Co.
Diversification Opportunities for Samsung Electronics and Hironic Co
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Samsung and Hironic is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Hironic Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hironic Co 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 Hironic Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hironic Co has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Hironic Co go up and down completely randomly.
Pair Corralation between Samsung Electronics and Hironic Co
Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the Hironic Co. But the stock apears to be less risky and, when comparing its historical volatility, Samsung Electronics Co is 1.91 times less risky than Hironic Co. The stock trades about -0.04 of its potential returns per unit of risk. The Hironic Co is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 710,833 in Hironic Co on September 14, 2024 and sell it today you would lose (70,833) from holding Hironic Co or give up 9.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.62% |
| Values | Daily Returns |
Samsung Electronics Co vs. Hironic Co
Performance |
| Timeline |
| Samsung Electronics |
| Hironic Co |
Samsung Electronics and Hironic Co Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Hironic Co
The main advantage of trading using opposite Samsung Electronics and Hironic Co positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Hironic Co 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 Hironic Co will offset losses from the drop in Hironic Co'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 |
| Hironic Co vs. Samsung Electronics Co | Hironic Co vs. Samsung Electronics Co | Hironic Co vs. SK Hynix | Hironic Co vs. SK Holdings 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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