Correlation Between Samsung Electronics and Mercury
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Mercury 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 Mercury 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 Mercury, you can compare the effects of market volatilities on Samsung Electronics and Mercury 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 Mercury. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Mercury.
Diversification Opportunities for Samsung Electronics and Mercury
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Samsung and Mercury is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Mercury in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mercury 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 Mercury. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mercury has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Mercury go up and down completely randomly.
Pair Corralation between Samsung Electronics and Mercury
Assuming the 90 days trading horizon Samsung Electronics Co is expected to generate 0.76 times more return on investment than Mercury. However, Samsung Electronics Co is 1.32 times less risky than Mercury. It trades about -0.03 of its potential returns per unit of risk. Mercury is currently generating about -0.04 per unit of risk. If you would invest 5,595,291 in Samsung Electronics Co on September 2, 2024 and sell it today you would lose (975,291) from holding Samsung Electronics Co or give up 17.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. Mercury
Performance |
| Timeline |
| Samsung Electronics |
| Mercury |
Samsung Electronics and Mercury Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Mercury
The main advantage of trading using opposite Samsung Electronics and Mercury positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Mercury 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 Mercury will offset losses from the drop in Mercury's long position.| Samsung Electronics vs. LG Corp | Samsung Electronics vs. Busan Industrial Co | Samsung Electronics vs. Busan Ind | Samsung Electronics vs. Mirae Asset Daewoo |
| Mercury vs. Iljin Display | Mercury vs. Nable Communications | Mercury vs. Korea Information Communications | Mercury vs. Jeju Beer Co |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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