Correlation Between Samsung Electronics and Hannong Chemicals
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Hannong Chemicals 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 Hannong Chemicals 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 Hannong Chemicals, you can compare the effects of market volatilities on Samsung Electronics and Hannong Chemicals 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 Hannong Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Hannong Chemicals.
Diversification Opportunities for Samsung Electronics and Hannong Chemicals
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Samsung and Hannong is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Hannong Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hannong Chemicals 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 Hannong Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hannong Chemicals has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Hannong Chemicals go up and down completely randomly.
Pair Corralation between Samsung Electronics and Hannong Chemicals
Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the Hannong Chemicals. But the stock apears to be less risky and, when comparing its historical volatility, Samsung Electronics Co is 3.18 times less risky than Hannong Chemicals. The stock trades about -0.01 of its potential returns per unit of risk. The Hannong Chemicals is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,054,607 in Hannong Chemicals on September 12, 2024 and sell it today you would earn a total of 280,393 from holding Hannong Chemicals or generate 26.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. Hannong Chemicals
Performance |
| Timeline |
| Samsung Electronics |
| Hannong Chemicals |
Samsung Electronics and Hannong Chemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Hannong Chemicals
The main advantage of trading using opposite Samsung Electronics and Hannong Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Hannong Chemicals 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 Hannong Chemicals will offset losses from the drop in Hannong Chemicals' long position.| Samsung Electronics vs. LG Corp | Samsung Electronics vs. Solution Advanced Technology | Samsung Electronics vs. Busan Industrial Co | Samsung Electronics vs. Busan Ind |
| Hannong Chemicals vs. Samsung Electronics Co | Hannong Chemicals vs. Samsung Electronics Co | Hannong Chemicals vs. SK Hynix | Hannong Chemicals vs. POSCO Holdings |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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