Correlation Between Samsung Electronics and Pharmsville
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Pharmsville 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 Pharmsville 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 Pharmsville Co, you can compare the effects of market volatilities on Samsung Electronics and Pharmsville 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 Pharmsville. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Pharmsville.
Diversification Opportunities for Samsung Electronics and Pharmsville
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Samsung and Pharmsville is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Pharmsville Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pharmsville 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 Pharmsville. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pharmsville has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Pharmsville go up and down completely randomly.
Pair Corralation between Samsung Electronics and Pharmsville
Assuming the 90 days trading horizon Samsung Electronics is expected to generate 2.66 times less return on investment than Pharmsville. But when comparing it to its historical volatility, Samsung Electronics Co is 3.02 times less risky than Pharmsville. It trades about 0.12 of its potential returns per unit of risk. Pharmsville Co is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 355,382 in Pharmsville Co on October 9, 2024 and sell it today you would earn a total of 28,618 from holding Pharmsville Co or generate 8.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. Pharmsville Co
Performance |
| Timeline |
| Samsung Electronics |
| Pharmsville |
Samsung Electronics and Pharmsville Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Pharmsville
The main advantage of trading using opposite Samsung Electronics and Pharmsville positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Pharmsville 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 Pharmsville will offset losses from the drop in Pharmsville's long position.| Samsung Electronics vs. LG Corp | Samsung Electronics vs. Busan Industrial Co | Samsung Electronics vs. Busan Ind | Samsung Electronics vs. UNISEM Co |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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