Correlation Between Samsung Electronics and SFA Engineering
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and SFA Engineering 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 SFA Engineering 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 SFA Engineering, you can compare the effects of market volatilities on Samsung Electronics and SFA Engineering 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 SFA Engineering. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and SFA Engineering.
Diversification Opportunities for Samsung Electronics and SFA Engineering
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Samsung and SFA is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and SFA Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SFA Engineering 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 SFA Engineering. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SFA Engineering has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and SFA Engineering go up and down completely randomly.
Pair Corralation between Samsung Electronics and SFA Engineering
Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the SFA Engineering. But the stock apears to be less risky and, when comparing its historical volatility, Samsung Electronics Co is 1.29 times less risky than SFA Engineering. The stock trades about -0.04 of its potential returns per unit of risk. The SFA Engineering is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2,050,000 in SFA Engineering on August 24, 2024 and sell it today you would earn a total of 70,000 from holding SFA Engineering or generate 3.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. SFA Engineering
Performance |
| Timeline |
| Samsung Electronics |
| SFA Engineering |
Samsung Electronics and SFA Engineering Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and SFA Engineering
The main advantage of trading using opposite Samsung Electronics and SFA Engineering positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, SFA Engineering 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 SFA Engineering will offset losses from the drop in SFA Engineering's long position.| Samsung Electronics vs. FNSTech Co | Samsung Electronics vs. Vitzro Tech Co | Samsung Electronics vs. Air Busan Co | Samsung Electronics vs. CU Medical Systems |
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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