Correlation Between Samsung Electronics and Air Busan
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Air Busan 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 Air Busan 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 Air Busan Co, you can compare the effects of market volatilities on Samsung Electronics and Air Busan 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 Air Busan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Air Busan.
Diversification Opportunities for Samsung Electronics and Air Busan
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Samsung and Air is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Air Busan Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Air Busan 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 Air Busan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Air Busan has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Air Busan go up and down completely randomly.
Pair Corralation between Samsung Electronics and Air Busan
Assuming the 90 days trading horizon Samsung Electronics Co is expected to generate 1.65 times more return on investment than Air Busan. However, Samsung Electronics is 1.65 times more volatile than Air Busan Co. It trades about -0.03 of its potential returns per unit of risk. Air Busan Co is currently generating about -0.16 per unit of risk. If you would invest 4,660,000 in Samsung Electronics Co on October 14, 2024 and sell it today you would lose (65,000) from holding Samsung Electronics Co or give up 1.39% 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. Air Busan Co
Performance |
| Timeline |
| Samsung Electronics |
| Air Busan |
Samsung Electronics and Air Busan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Air Busan
The main advantage of trading using opposite Samsung Electronics and Air Busan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Air Busan 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 Air Busan will offset losses from the drop in Air Busan's long position.| Samsung Electronics vs. Korea Computer | Samsung Electronics vs. Duksan Hi Metal | Samsung Electronics vs. Sangsin Energy Display | Samsung Electronics vs. BIT Computer Co |
| Air Busan vs. Worldex Industry Trading | Air Busan vs. DB Financial Investment | Air Busan vs. Korean Drug Co | Air Busan vs. Golden Bridge Investment |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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