Correlation Between Samsung Electronics and Design
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Design 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 Design 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 Design Co, you can compare the effects of market volatilities on Samsung Electronics and Design 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 Design. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Design.
Diversification Opportunities for Samsung Electronics and Design
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Samsung and Design is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Design Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Design 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 Design. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Design has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Design go up and down completely randomly.
Pair Corralation between Samsung Electronics and Design
Assuming the 90 days trading horizon Samsung Electronics Co is expected to generate 0.6 times more return on investment than Design. However, Samsung Electronics Co is 1.66 times less risky than Design. It trades about -0.09 of its potential returns per unit of risk. Design Co is currently generating about -0.25 per unit of risk. If you would invest 4,860,000 in Samsung Electronics Co on September 4, 2024 and sell it today you would lose (300,000) from holding Samsung Electronics Co or give up 6.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. Design Co
Performance |
| Timeline |
| Samsung Electronics |
| Design |
Samsung Electronics and Design Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Design
The main advantage of trading using opposite Samsung Electronics and Design positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Design 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 Design will offset losses from the drop in Design's long position.| Samsung Electronics vs. DC Media Co | Samsung Electronics vs. Shinsegae Information Communication | Samsung Electronics vs. Insung Information Co | Samsung Electronics vs. FNC Entertainment Co |
| Design vs. Insung Information Co | Design vs. Moadata Co | Design vs. Dongil Metal Co | Design vs. Samick Musical Instruments |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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