Correlation Between Samsung Electronics and SGC ETEC
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and SGC ETEC 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 SGC ETEC 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 SGC eTEC EC, you can compare the effects of market volatilities on Samsung Electronics and SGC ETEC 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 SGC ETEC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and SGC ETEC.
Diversification Opportunities for Samsung Electronics and SGC ETEC
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Samsung and SGC is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and SGC eTEC EC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SGC eTEC EC 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 SGC ETEC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SGC eTEC EC has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and SGC ETEC go up and down completely randomly.
Pair Corralation between Samsung Electronics and SGC ETEC
Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the SGC ETEC. In addition to that, Samsung Electronics is 1.03 times more volatile than SGC eTEC EC. It trades about -0.11 of its total potential returns per unit of risk. SGC eTEC EC is currently generating about -0.02 per unit of volatility. If you would invest 1,536,000 in SGC eTEC EC on September 3, 2024 and sell it today you would lose (127,000) from holding SGC eTEC EC or give up 8.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. SGC eTEC EC
Performance |
| Timeline |
| Samsung Electronics |
| SGC eTEC EC |
Samsung Electronics and SGC ETEC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and SGC ETEC
The main advantage of trading using opposite Samsung Electronics and SGC ETEC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, SGC ETEC 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 SGC ETEC will offset losses from the drop in SGC ETEC's long position.| Samsung Electronics vs. Busan Industrial Co | Samsung Electronics vs. UNISEM Co | Samsung Electronics vs. RPBio Inc | Samsung Electronics vs. Finebesteel |
| SGC ETEC vs. LG Display | SGC ETEC vs. Hyundai Motor | SGC ETEC vs. Hyundai Motor Co | SGC ETEC vs. Hyundai Motor 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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