Correlation Between Samsung Electronics and Newtree CoLtd
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Newtree CoLtd 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 Newtree CoLtd 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 Newtree CoLtd, you can compare the effects of market volatilities on Samsung Electronics and Newtree CoLtd 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 Newtree CoLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Newtree CoLtd.
Diversification Opportunities for Samsung Electronics and Newtree CoLtd
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Samsung and Newtree is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Newtree CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Newtree CoLtd 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 Newtree CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Newtree CoLtd has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Newtree CoLtd go up and down completely randomly.
Pair Corralation between Samsung Electronics and Newtree CoLtd
Assuming the 90 days trading horizon Samsung Electronics Co is expected to generate 0.45 times more return on investment than Newtree CoLtd. However, Samsung Electronics Co is 2.21 times less risky than Newtree CoLtd. It trades about -0.09 of its potential returns per unit of risk. Newtree CoLtd is currently generating about -0.06 per unit of risk. If you would invest 6,074,153 in Samsung Electronics Co on September 1, 2024 and sell it today you would lose (1,454,153) from holding Samsung Electronics Co or give up 23.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.19% |
| Values | Daily Returns |
Samsung Electronics Co vs. Newtree CoLtd
Performance |
| Timeline |
| Samsung Electronics |
| Newtree CoLtd |
Samsung Electronics and Newtree CoLtd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Newtree CoLtd
The main advantage of trading using opposite Samsung Electronics and Newtree CoLtd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Newtree CoLtd 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 Newtree CoLtd will offset losses from the drop in Newtree CoLtd's long position.| Samsung Electronics vs. Seoul Electronics Telecom | Samsung Electronics vs. Ni Steel | Samsung Electronics vs. CKH Food Health | Samsung Electronics vs. Daedong Steel Co |
| Newtree CoLtd vs. Cherrybro coLtd | Newtree CoLtd vs. Busan Industrial Co | Newtree CoLtd vs. Busan Ind | Newtree CoLtd vs. Mirae Asset Daewoo |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
Other Complementary Tools
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Equity Valuation Check real value of public entities based on technical and fundamental data |