Correlation Between Samsung Electronics and SK Chemicals
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and SK Chemicals 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 SK Chemicals 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 SK Chemicals Co, you can compare the effects of market volatilities on Samsung Electronics and SK Chemicals 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 SK Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and SK Chemicals.
Diversification Opportunities for Samsung Electronics and SK Chemicals
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Samsung and 28513K is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and SK Chemicals Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SK Chemicals 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 SK Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SK Chemicals has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and SK Chemicals go up and down completely randomly.
Pair Corralation between Samsung Electronics and SK Chemicals
Assuming the 90 days trading horizon Samsung Electronics Co is expected to generate 2.16 times more return on investment than SK Chemicals. However, Samsung Electronics is 2.16 times more volatile than SK Chemicals Co. It trades about -0.06 of its potential returns per unit of risk. SK Chemicals Co is currently generating about -0.41 per unit of risk. If you would invest 5,090,000 in Samsung Electronics Co on August 30, 2024 and sell it today you would lose (345,000) from holding Samsung Electronics Co or give up 6.78% 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. SK Chemicals Co
Performance |
| Timeline |
| Samsung Electronics |
| SK Chemicals |
Samsung Electronics and SK Chemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and SK Chemicals
The main advantage of trading using opposite Samsung Electronics and SK Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, SK Chemicals 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 SK Chemicals will offset losses from the drop in SK Chemicals' long position.| Samsung Electronics vs. LG Corp | Samsung Electronics vs. Busan Industrial Co | Samsung Electronics vs. Busan Ind | Samsung Electronics 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
Other Complementary Tools
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum |