Correlation Between Samsung Electronics and TPC Mechatronics
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and TPC Mechatronics 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 TPC Mechatronics 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 TPC Mechatronics, you can compare the effects of market volatilities on Samsung Electronics and TPC Mechatronics 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 TPC Mechatronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and TPC Mechatronics.
Diversification Opportunities for Samsung Electronics and TPC Mechatronics
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Samsung and TPC is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and TPC Mechatronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TPC Mechatronics 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 TPC Mechatronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TPC Mechatronics has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and TPC Mechatronics go up and down completely randomly.
Pair Corralation between Samsung Electronics and TPC Mechatronics
Assuming the 90 days trading horizon Samsung Electronics Co is expected to generate 0.89 times more return on investment than TPC Mechatronics. However, Samsung Electronics Co is 1.13 times less risky than TPC Mechatronics. It trades about 0.02 of its potential returns per unit of risk. TPC Mechatronics is currently generating about -0.16 per unit of risk. If you would invest 4,880,000 in Samsung Electronics Co on August 27, 2024 and sell it today you would earn a total of 25,000 from holding Samsung Electronics Co or generate 0.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. TPC Mechatronics
Performance |
| Timeline |
| Samsung Electronics |
| TPC Mechatronics |
Samsung Electronics and TPC Mechatronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and TPC Mechatronics
The main advantage of trading using opposite Samsung Electronics and TPC Mechatronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, TPC Mechatronics 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 TPC Mechatronics will offset losses from the drop in TPC Mechatronics' long position.| Samsung Electronics vs. JYP Entertainment | Samsung Electronics vs. Samsung Heavy Industries | Samsung Electronics vs. Hanjinkal |
| TPC Mechatronics vs. Samsung Electronics Co | TPC Mechatronics vs. Samsung Electronics Co | TPC Mechatronics vs. Hyundai Motor Co | TPC Mechatronics vs. Hyundai Motor |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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