Correlation Between Samsung Electronics and Korea Environment
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Korea Environment 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 Korea Environment 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 Korea Environment Technology, you can compare the effects of market volatilities on Samsung Electronics and Korea Environment 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 Korea Environment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Korea Environment.
Diversification Opportunities for Samsung Electronics and Korea Environment
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Samsung and Korea is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Korea Environment Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Korea Environment 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 Korea Environment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Korea Environment has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Korea Environment go up and down completely randomly.
Pair Corralation between Samsung Electronics and Korea Environment
Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the Korea Environment. In addition to that, Samsung Electronics is 1.3 times more volatile than Korea Environment Technology. It trades about -0.01 of its total potential returns per unit of risk. Korea Environment Technology is currently generating about 0.06 per unit of volatility. If you would invest 653,114 in Korea Environment Technology on September 26, 2024 and sell it today you would earn a total of 248,886 from holding Korea Environment Technology or generate 38.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
Samsung Electronics Co vs. Korea Environment Technology
Performance |
| Timeline |
| Samsung Electronics |
| Korea Environment |
Samsung Electronics and Korea Environment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Korea Environment
The main advantage of trading using opposite Samsung Electronics and Korea Environment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Korea Environment 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 Korea Environment will offset losses from the drop in Korea Environment's long position.| Samsung Electronics vs. LG Corp | Samsung Electronics vs. Zinus Inc | Samsung Electronics vs. Humasis Co | Samsung Electronics vs. JYP Entertainment |
| Korea Environment vs. INSUN Environmental New | Korea Environment vs. LEENO Industrial | Korea Environment vs. Kmw Inc | Korea Environment vs. NICE Information 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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