Correlation Between Samsung Electronics and LF Co
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and LF Co 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 LF Co 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 LF Co, you can compare the effects of market volatilities on Samsung Electronics and LF Co 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 LF Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and LF Co.
Diversification Opportunities for Samsung Electronics and LF Co
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Samsung and 066970 is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and LF Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LF Co 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 LF Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LF Co has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and LF Co go up and down completely randomly.
Pair Corralation between Samsung Electronics and LF Co
Assuming the 90 days trading horizon Samsung Electronics Co is expected to generate 0.38 times more return on investment than LF Co. However, Samsung Electronics Co is 2.61 times less risky than LF Co. It trades about -0.02 of its potential returns per unit of risk. LF Co is currently generating about -0.03 per unit of risk. If you would invest 5,267,350 in Samsung Electronics Co on September 12, 2024 and sell it today you would lose (747,350) from holding Samsung Electronics Co or give up 14.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. LF Co
Performance |
| Timeline |
| Samsung Electronics |
| LF Co |
Samsung Electronics and LF Co Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and LF Co
The main advantage of trading using opposite Samsung Electronics and LF Co positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, LF Co 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 LF Co will offset losses from the drop in LF Co's long position.| Samsung Electronics vs. LG Corp | Samsung Electronics vs. Solution Advanced Technology | Samsung Electronics vs. Busan Industrial Co | Samsung Electronics vs. Busan Ind |
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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