Correlation Between Samsung Electronics and Humax
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Humax 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 Humax 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 Humax Co, you can compare the effects of market volatilities on Samsung Electronics and Humax 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 Humax. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Humax.
Diversification Opportunities for Samsung Electronics and Humax
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Samsung and Humax is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Humax Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Humax 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 Humax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Humax has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Humax go up and down completely randomly.
Pair Corralation between Samsung Electronics and Humax
Assuming the 90 days trading horizon Samsung Electronics Co is expected to generate 0.87 times more return on investment than Humax. However, Samsung Electronics Co is 1.15 times less risky than Humax. It trades about -0.05 of its potential returns per unit of risk. Humax Co is currently generating about -0.42 per unit of risk. If you would invest 4,935,000 in Samsung Electronics Co on September 13, 2024 and sell it today you would lose (275,000) from holding Samsung Electronics Co or give up 5.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. Humax Co
Performance |
| Timeline |
| Samsung Electronics |
| Humax |
Samsung Electronics and Humax Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Humax
The main advantage of trading using opposite Samsung Electronics and Humax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Humax 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 Humax will offset losses from the drop in Humax'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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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