Correlation Between Gilead Sciences and Samsung Electronics
Can any of the company-specific risk be diversified away by investing in both Gilead Sciences 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 Gilead Sciences and Samsung Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gilead Sciences and Samsung Electronics Co, you can compare the effects of market volatilities on Gilead Sciences 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 Gilead Sciences with a short position of Samsung Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gilead Sciences and Samsung Electronics.
Diversification Opportunities for Gilead Sciences and Samsung Electronics
-0.93 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Gilead and Samsung is -0.93. Overlapping area represents the amount of risk that can be diversified away by holding Gilead Sciences and Samsung Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung Electronics and Gilead Sciences 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 Gilead Sciences 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 Gilead Sciences i.e., Gilead Sciences and Samsung Electronics go up and down completely randomly.
Pair Corralation between Gilead Sciences and Samsung Electronics
Assuming the 90 days trading horizon Gilead Sciences is expected to generate 0.74 times more return on investment than Samsung Electronics. However, Gilead Sciences is 1.36 times less risky than Samsung Electronics. It trades about 0.22 of its potential returns per unit of risk. Samsung Electronics Co is currently generating about -0.09 per unit of risk. If you would invest 6,218 in Gilead Sciences on August 30, 2024 and sell it today you would earn a total of 3,064 from holding Gilead Sciences or generate 49.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gilead Sciences vs. Samsung Electronics Co
Performance |
| Timeline |
| Gilead Sciences |
| Samsung Electronics |
Gilead Sciences and Samsung Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gilead Sciences and Samsung Electronics
The main advantage of trading using opposite Gilead Sciences and Samsung Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gilead Sciences 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.| Gilead Sciences vs. CleanTech Lithium plc | Gilead Sciences vs. Playtech Plc | Gilead Sciences vs. AIM ImmunoTech | Gilead Sciences vs. United States Steel |
| Samsung Electronics vs. Litigation Capital Management | Samsung Electronics vs. Liontrust Asset Management | Samsung Electronics vs. Invesco Physical Silver | Samsung Electronics vs. Westlake Chemical Corp |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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