Correlation Between Samsung Electronics and Organic Special
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Organic Special 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 Organic Special 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 Organic Special Pet, you can compare the effects of market volatilities on Samsung Electronics and Organic Special 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 Organic Special. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Organic Special.
Diversification Opportunities for Samsung Electronics and Organic Special
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Samsung and Organic is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Organic Special Pet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Organic Special Pet 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 Organic Special. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Organic Special Pet has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Organic Special go up and down completely randomly.
Pair Corralation between Samsung Electronics and Organic Special
Assuming the 90 days trading horizon Samsung Electronics Co is expected to generate 1.45 times more return on investment than Organic Special. However, Samsung Electronics is 1.45 times more volatile than Organic Special Pet. It trades about -0.02 of its potential returns per unit of risk. Organic Special Pet is currently generating about -0.22 per unit of risk. If you would invest 4,865,000 in Samsung Electronics Co on August 31, 2024 and sell it today you would lose (90,000) from holding Samsung Electronics Co or give up 1.85% 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. Organic Special Pet
Performance |
| Timeline |
| Samsung Electronics |
| Organic Special Pet |
Samsung Electronics and Organic Special Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Organic Special
The main advantage of trading using opposite Samsung Electronics and Organic Special positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Organic Special 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 Organic Special will offset losses from the drop in Organic Special's long position.| Samsung Electronics vs. LG Corp | Samsung Electronics vs. Busan Industrial Co | Samsung Electronics vs. Busan Ind | Samsung Electronics vs. Mirae Asset Daewoo |
| Organic Special vs. Samsung Electronics Co | Organic Special vs. Samsung Electronics Co | Organic Special vs. LG Energy Solution | Organic Special 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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