Correlation Between Samsung Electronics and Solux
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Solux 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 Solux 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 Solux Co, you can compare the effects of market volatilities on Samsung Electronics and Solux 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 Solux. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Solux.
Diversification Opportunities for Samsung Electronics and Solux
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Samsung and Solux is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Solux Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Solux 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 Solux. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Solux has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Solux go up and down completely randomly.
Pair Corralation between Samsung Electronics and Solux
Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the Solux. But the stock apears to be less risky and, when comparing its historical volatility, Samsung Electronics Co is 2.75 times less risky than Solux. The stock trades about -0.05 of its potential returns per unit of risk. The Solux Co is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 1,182,500 in Solux Co on August 25, 2024 and sell it today you would lose (318,500) from holding Solux Co or give up 26.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 90.11% |
| Values | Daily Returns |
Samsung Electronics Co vs. Solux Co
Performance |
| Timeline |
| Samsung Electronics |
| Solux |
Samsung Electronics and Solux Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Solux
The main advantage of trading using opposite Samsung Electronics and Solux positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Solux 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 Solux will offset losses from the drop in Solux's long position.| Samsung Electronics vs. Mobileleader CoLtd | Samsung Electronics vs. Innowireless Co | Samsung Electronics vs. Daechang Steel Co | Samsung Electronics vs. Hanil Iron Steel |
| Solux vs. Samsung Electronics Co | Solux vs. Samsung Electronics Co | Solux vs. LG Energy Solution | Solux vs. SK Hynix |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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