Correlation Between Samsung Electronics and FNC Entertainment
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and FNC Entertainment 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 FNC Entertainment 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 FNC Entertainment Co, you can compare the effects of market volatilities on Samsung Electronics and FNC Entertainment 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 FNC Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and FNC Entertainment.
Diversification Opportunities for Samsung Electronics and FNC Entertainment
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Samsung and FNC is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and FNC Entertainment Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FNC Entertainment 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 FNC Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FNC Entertainment has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and FNC Entertainment go up and down completely randomly.
Pair Corralation between Samsung Electronics and FNC Entertainment
Assuming the 90 days trading horizon Samsung Electronics is expected to generate 1.32 times less return on investment than FNC Entertainment. But when comparing it to its historical volatility, Samsung Electronics Co is 1.68 times less risky than FNC Entertainment. It trades about 0.32 of its potential returns per unit of risk. FNC Entertainment Co is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 287,500 in FNC Entertainment Co on November 27, 2024 and sell it today you would earn a total of 35,000 from holding FNC Entertainment Co or generate 12.17% 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. FNC Entertainment Co
Performance |
| Timeline |
| Samsung Electronics |
| FNC Entertainment |
Samsung Electronics and FNC Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and FNC Entertainment
The main advantage of trading using opposite Samsung Electronics and FNC Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, FNC Entertainment 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 FNC Entertainment will offset losses from the drop in FNC Entertainment's long position.| Samsung Electronics vs. GS Retail Co | Samsung Electronics vs. Jb Financial | Samsung Electronics vs. Hana Financial | Samsung Electronics vs. Miwon Chemicals Co |
| FNC Entertainment vs. Inzi Display CoLtd | FNC Entertainment vs. KakaoBank Corp | FNC Entertainment vs. Koryo Credit Information | FNC Entertainment vs. Incar Financial Service |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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