Correlation Between British American and Samsung Electronics
Can any of the company-specific risk be diversified away by investing in both British American and Samsung Electronics 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 British American and Samsung Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between British American Tobacco and Samsung Electronics Co, you can compare the effects of market volatilities on British American and Samsung Electronics 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 British American with a short position of Samsung Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of British American and Samsung Electronics.
Diversification Opportunities for British American and Samsung Electronics
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between British and Samsung is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding British American Tobacco and Samsung Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung Electronics and British American 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 British American Tobacco are associated (or correlated) with Samsung Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samsung Electronics has no effect on the direction of British American i.e., British American and Samsung Electronics go up and down completely randomly.
Pair Corralation between British American and Samsung Electronics
Assuming the 90 days trading horizon British American Tobacco is expected to generate 0.38 times more return on investment than Samsung Electronics. However, British American Tobacco is 2.65 times less risky than Samsung Electronics. It trades about 0.08 of its potential returns per unit of risk. Samsung Electronics Co is currently generating about -0.13 per unit of risk. If you would invest 3,696 in British American Tobacco on September 20, 2024 and sell it today you would earn a total of 51.00 from holding British American Tobacco or generate 1.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
British American Tobacco vs. Samsung Electronics Co
Performance |
| Timeline |
| British American Tobacco |
| Samsung Electronics |
British American and Samsung Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with British American and Samsung Electronics
The main advantage of trading using opposite British American and Samsung Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if British American position performs unexpectedly, Samsung Electronics 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 Electronics will offset losses from the drop in Samsung Electronics' long position.| British American vs. Samsung Electronics Co | British American vs. Samsung Electronics Co | British American vs. Hyundai Motor | British American vs. Reliance Industries Ltd |
| Samsung Electronics vs. Endeavour Mining Corp | Samsung Electronics vs. CNH Industrial NV | Samsung Electronics vs. Neometals | Samsung Electronics vs. GoldMining |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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