Correlation Between Samsung Life and Samsung Special
Can any of the company-specific risk be diversified away by investing in both Samsung Life and Samsung 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 Life and Samsung Special into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Samsung Life and Samsung Special Purpose, you can compare the effects of market volatilities on Samsung Life and Samsung 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 Life with a short position of Samsung Special. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Life and Samsung Special.
Diversification Opportunities for Samsung Life and Samsung Special
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Samsung and Samsung is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Life and Samsung Special Purpose in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung Special Purpose and Samsung Life 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 Life are associated (or correlated) with Samsung Special. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samsung Special Purpose has no effect on the direction of Samsung Life i.e., Samsung Life and Samsung Special go up and down completely randomly.
Pair Corralation between Samsung Life and Samsung Special
Assuming the 90 days trading horizon Samsung Life is expected to generate 2.23 times more return on investment than Samsung Special. However, Samsung Life is 2.23 times more volatile than Samsung Special Purpose. It trades about 0.07 of its potential returns per unit of risk. Samsung Special Purpose is currently generating about -0.05 per unit of risk. If you would invest 6,600,000 in Samsung Life on September 12, 2024 and sell it today you would earn a total of 3,450,000 from holding Samsung Life or generate 52.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Life vs. Samsung Special Purpose
Performance |
| Timeline |
| Samsung Life |
| Samsung Special Purpose |
Samsung Life and Samsung Special Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Life and Samsung Special
The main advantage of trading using opposite Samsung Life and Samsung Special positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Life position performs unexpectedly, Samsung 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 Samsung Special will offset losses from the drop in Samsung Special's long position.| Samsung Life vs. Innowireless Co | Samsung Life vs. Polaris Office Corp | Samsung Life vs. Hyundai Home Shopping | Samsung Life vs. Echomarketing CoLtd |
| Samsung Special vs. Daewon Media Co | Samsung Special vs. DC Media Co | Samsung Special vs. Next Entertainment World | Samsung Special vs. Daejung Chemicals Metals |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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