Correlation Between Samsung Electronics and CTK
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and CTK 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 CTK 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 CTK Co, you can compare the effects of market volatilities on Samsung Electronics and CTK 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 CTK. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and CTK.
Diversification Opportunities for Samsung Electronics and CTK
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Samsung and CTK is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and CTK Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CTK Co 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 CTK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CTK Co has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and CTK go up and down completely randomly.
Pair Corralation between Samsung Electronics and CTK
Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the CTK. But the stock apears to be less risky and, when comparing its historical volatility, Samsung Electronics Co is 1.38 times less risky than CTK. The stock trades about -0.06 of its potential returns per unit of risk. The CTK Co is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 559,000 in CTK Co on August 30, 2024 and sell it today you would earn a total of 71,000 from holding CTK Co or generate 12.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.56% |
| Values | Daily Returns |
Samsung Electronics Co vs. CTK Co
Performance |
| Timeline |
| Samsung Electronics |
| CTK Co |
Samsung Electronics and CTK Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and CTK
The main advantage of trading using opposite Samsung Electronics and CTK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, CTK 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 CTK will offset losses from the drop in CTK's long position.| Samsung Electronics vs. Nice Information Telecommunication | Samsung Electronics vs. Mobile Appliance | Samsung Electronics vs. Korea Shipbuilding Offshore | Samsung Electronics vs. Daou Technology |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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