Correlation Between Samsung Electronics and Namhwa Industrial
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Namhwa Industrial 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 Namhwa Industrial 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 Namhwa Industrial Co, you can compare the effects of market volatilities on Samsung Electronics and Namhwa Industrial 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 Namhwa Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Namhwa Industrial.
Diversification Opportunities for Samsung Electronics and Namhwa Industrial
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Samsung and Namhwa is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Namhwa Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Namhwa Industrial 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 Namhwa Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Namhwa Industrial has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Namhwa Industrial go up and down completely randomly.
Pair Corralation between Samsung Electronics and Namhwa Industrial
Assuming the 90 days trading horizon Samsung Electronics is expected to generate 2.34 times less return on investment than Namhwa Industrial. But when comparing it to its historical volatility, Samsung Electronics Co is 1.13 times less risky than Namhwa Industrial. It trades about 0.07 of its potential returns per unit of risk. Namhwa Industrial Co is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 513,149 in Namhwa Industrial Co on October 21, 2024 and sell it today you would earn a total of 23,851 from holding Namhwa Industrial Co or generate 4.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. Namhwa Industrial Co
Performance |
| Timeline |
| Samsung Electronics |
| Namhwa Industrial |
Samsung Electronics and Namhwa Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Namhwa Industrial
The main advantage of trading using opposite Samsung Electronics and Namhwa Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Namhwa Industrial 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 Namhwa Industrial will offset losses from the drop in Namhwa Industrial's long position.| Samsung Electronics vs. Seoul Electronics Telecom | Samsung Electronics vs. Cuckoo Electronics Co | Samsung Electronics vs. Innowireless Co | Samsung Electronics vs. Wireless Power Amplifier |
| Namhwa Industrial vs. Eagon Industrial Co | Namhwa Industrial vs. Myoung Shin Industrial | Namhwa Industrial vs. Seoyon Topmetal Co | Namhwa Industrial vs. Hyundai Industrial 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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