Correlation Between Samsung Electronics and SK Holdings
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and SK Holdings 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 SK Holdings 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 SK Holdings Co, you can compare the effects of market volatilities on Samsung Electronics and SK Holdings 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 SK Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and SK Holdings.
Diversification Opportunities for Samsung Electronics and SK Holdings
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Samsung and 034730 is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and SK Holdings Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SK Holdings 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 SK Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SK Holdings has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and SK Holdings go up and down completely randomly.
Pair Corralation between Samsung Electronics and SK Holdings
Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the SK Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Samsung Electronics Co is 1.14 times less risky than SK Holdings. The stock trades about -0.36 of its potential returns per unit of risk. The SK Holdings Co is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 14,090,000 in SK Holdings Co on November 7, 2024 and sell it today you would earn a total of 720,000 from holding SK Holdings Co or generate 5.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. SK Holdings Co
Performance |
| Timeline |
| Samsung Electronics |
| SK Holdings |
Samsung Electronics and SK Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and SK Holdings
The main advantage of trading using opposite Samsung Electronics and SK Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, SK Holdings 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 SK Holdings will offset losses from the drop in SK Holdings' long position.| Samsung Electronics vs. Genie Music | Samsung Electronics vs. Seers Technology | Samsung Electronics vs. Cots Technology Co | Samsung Electronics vs. Daou Technology |
| SK Holdings vs. Samsung Card Co | SK Holdings vs. EBEST Investment Securities | SK Holdings vs. Koh Young Technology | SK Holdings vs. Hansol Chemica |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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