Correlation Between Samsung Electronics and Hana Financial
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Hana Financial 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 Hana Financial 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 Hana Financial, you can compare the effects of market volatilities on Samsung Electronics and Hana Financial 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 Hana Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Hana Financial.
Diversification Opportunities for Samsung Electronics and Hana Financial
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Samsung and Hana is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Hana Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hana Financial 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 Hana Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hana Financial has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Hana Financial go up and down completely randomly.
Pair Corralation between Samsung Electronics and Hana Financial
Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the Hana Financial. In addition to that, Samsung Electronics is 1.65 times more volatile than Hana Financial. It trades about -0.14 of its total potential returns per unit of risk. Hana Financial is currently generating about 0.39 per unit of volatility. If you would invest 5,680,000 in Hana Financial on November 3, 2024 and sell it today you would earn a total of 370,000 from holding Hana Financial or generate 6.51% 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. Hana Financial
Performance |
| Timeline |
| Samsung Electronics |
| Hana Financial |
Samsung Electronics and Hana Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Hana Financial
The main advantage of trading using opposite Samsung Electronics and Hana Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Hana Financial 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 Hana Financial will offset losses from the drop in Hana Financial's long position.| Samsung Electronics vs. YG Entertainment | Samsung Electronics vs. Digital Multimedia Technology | Samsung Electronics vs. ECSTELECOM Co | Samsung Electronics vs. Kaonmedia Co |
| Hana Financial vs. Hanjin Transportation Co | Hana Financial vs. Seoul Food Industrial | Hana Financial vs. Daiyang Metal Co | Hana Financial vs. Industrial Bank |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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