Correlation Between Kellogg and Samsung Electronics
Can any of the company-specific risk be diversified away by investing in both Kellogg 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 Kellogg and Samsung Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kellogg Co and Samsung Electronics Co, you can compare the effects of market volatilities on Kellogg 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 Kellogg with a short position of Samsung Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kellogg and Samsung Electronics.
Diversification Opportunities for Kellogg and Samsung Electronics
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Kellogg and Samsung is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Kellogg Co and Samsung Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung Electronics and Kellogg 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 Kellogg Co 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 Kellogg i.e., Kellogg and Samsung Electronics go up and down completely randomly.
Pair Corralation between Kellogg and Samsung Electronics
Assuming the 90 days trading horizon Kellogg Co is expected to generate 0.73 times more return on investment than Samsung Electronics. However, Kellogg Co is 1.38 times less risky than Samsung Electronics. It trades about 0.06 of its potential returns per unit of risk. Samsung Electronics Co is currently generating about -0.01 per unit of risk. If you would invest 5,700 in Kellogg Co on December 4, 2024 and sell it today you would earn a total of 2,546 from holding Kellogg Co or generate 44.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 97.59% |
| Values | Daily Returns |
Kellogg Co vs. Samsung Electronics Co
Performance |
| Timeline |
| Kellogg |
| Samsung Electronics |
Kellogg and Samsung Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kellogg and Samsung Electronics
The main advantage of trading using opposite Kellogg and Samsung Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kellogg 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.| Kellogg vs. Lindsell Train Investment | Kellogg vs. SBM Offshore NV | Kellogg vs. PureTech Health plc | Kellogg vs. Cardinal Health |
| Samsung Electronics vs. Silvercorp Metals | Samsung Electronics vs. Direct Line Insurance | Samsung Electronics vs. Liechtensteinische Landesbank AG | Samsung Electronics vs. Critical Metals Plc |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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