Correlation Between Samsung Electronics and Union Materials
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Union Materials 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 Union Materials 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 Union Materials Corp, you can compare the effects of market volatilities on Samsung Electronics and Union Materials 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 Union Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Union Materials.
Diversification Opportunities for Samsung Electronics and Union Materials
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Samsung and Union is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Union Materials Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Union Materials Corp 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 Union Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Union Materials Corp has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Union Materials go up and down completely randomly.
Pair Corralation between Samsung Electronics and Union Materials
Assuming the 90 days trading horizon Samsung Electronics Co is expected to generate 0.77 times more return on investment than Union Materials. However, Samsung Electronics Co is 1.3 times less risky than Union Materials. It trades about 0.02 of its potential returns per unit of risk. Union Materials Corp is currently generating about 0.01 per unit of risk. If you would invest 4,880,000 in Samsung Electronics Co on August 29, 2024 and sell it today you would earn a total of 20,000 from holding Samsung Electronics Co or generate 0.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. Union Materials Corp
Performance |
| Timeline |
| Samsung Electronics |
| Union Materials Corp |
Samsung Electronics and Union Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Union Materials
The main advantage of trading using opposite Samsung Electronics and Union Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Union Materials 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 Union Materials will offset losses from the drop in Union Materials' long position.| Samsung Electronics vs. JYP Entertainment | Samsung Electronics vs. Samsung Heavy Industries | Samsung Electronics vs. Hanjinkal |
| Union Materials vs. Busan Industrial Co | Union Materials vs. Busan Ind | Union Materials vs. Mirae Asset Daewoo | Union Materials vs. UNISEM 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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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