Correlation Between Samsung Electronics and Wave Electronics
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Wave Electronics 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 Wave Electronics 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 Wave Electronics Co, you can compare the effects of market volatilities on Samsung Electronics and Wave Electronics 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 Wave Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Wave Electronics.
Diversification Opportunities for Samsung Electronics and Wave Electronics
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Samsung and Wave is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Wave Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wave Electronics 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 Wave Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wave Electronics has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Wave Electronics go up and down completely randomly.
Pair Corralation between Samsung Electronics and Wave Electronics
Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the Wave Electronics. In addition to that, Samsung Electronics is 1.18 times more volatile than Wave Electronics Co. It trades about -0.23 of its total potential returns per unit of risk. Wave Electronics Co is currently generating about 0.05 per unit of volatility. If you would invest 389,500 in Wave Electronics Co on November 7, 2024 and sell it today you would earn a total of 4,500 from holding Wave Electronics Co or generate 1.16% 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. Wave Electronics Co
Performance |
| Timeline |
| Samsung Electronics |
| Wave Electronics |
Samsung Electronics and Wave Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Wave Electronics
The main advantage of trading using opposite Samsung Electronics and Wave Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Wave Electronics 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 Wave Electronics will offset losses from the drop in Wave Electronics' long position.| Samsung Electronics vs. Daejung Chemicals Metals | Samsung Electronics vs. Asiana Airlines | Samsung Electronics vs. Inzi Display CoLtd | Samsung Electronics vs. Shin Steel Co |
| Wave Electronics vs. Innowireless Co | Wave Electronics vs. CG Hi Tech | Wave Electronics vs. LG Household Healthcare | Wave Electronics vs. Nice Information Telecommunication |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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