Correlation Between Alliance Data and Samsung Electronics
Can any of the company-specific risk be diversified away by investing in both Alliance Data 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 Alliance Data and Samsung Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alliance Data Systems and Samsung Electronics Co, you can compare the effects of market volatilities on Alliance Data 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 Alliance Data with a short position of Samsung Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alliance Data and Samsung Electronics.
Diversification Opportunities for Alliance Data and Samsung Electronics
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Alliance and Samsung is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Alliance Data Systems and Samsung Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung Electronics and Alliance Data 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 Alliance Data Systems 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 Alliance Data i.e., Alliance Data and Samsung Electronics go up and down completely randomly.
Pair Corralation between Alliance Data and Samsung Electronics
Assuming the 90 days trading horizon Alliance Data Systems is expected to generate 1.69 times more return on investment than Samsung Electronics. However, Alliance Data is 1.69 times more volatile than Samsung Electronics Co. It trades about 0.1 of its potential returns per unit of risk. Samsung Electronics Co is currently generating about -0.05 per unit of risk. If you would invest 3,538 in Alliance Data Systems on August 29, 2024 and sell it today you would earn a total of 2,351 from holding Alliance Data Systems or generate 66.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.76% |
| Values | Daily Returns |
Alliance Data Systems vs. Samsung Electronics Co
Performance |
| Timeline |
| Alliance Data Systems |
| Samsung Electronics |
Alliance Data and Samsung Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alliance Data and Samsung Electronics
The main advantage of trading using opposite Alliance Data and Samsung Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alliance Data 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.| Alliance Data vs. Lendinvest PLC | Alliance Data vs. Neometals | Alliance Data vs. Coor Service Management | Alliance Data vs. Albion Technology General |
| Samsung Electronics vs. Ondine Biomedical | Samsung Electronics vs. Europa Metals | Samsung Electronics vs. Lendinvest PLC | Samsung Electronics vs. Neometals |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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