Correlation Between Scandinavian Tobacco and Samsung Electronics
Can any of the company-specific risk be diversified away by investing in both Scandinavian Tobacco 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 Scandinavian Tobacco and Samsung Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Scandinavian Tobacco Group and Samsung Electronics Co, you can compare the effects of market volatilities on Scandinavian Tobacco 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 Scandinavian Tobacco with a short position of Samsung Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scandinavian Tobacco and Samsung Electronics.
Diversification Opportunities for Scandinavian Tobacco and Samsung Electronics
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Scandinavian and Samsung is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Scandinavian Tobacco Group and Samsung Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung Electronics and Scandinavian Tobacco 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 Scandinavian Tobacco Group 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 Scandinavian Tobacco i.e., Scandinavian Tobacco and Samsung Electronics go up and down completely randomly.
Pair Corralation between Scandinavian Tobacco and Samsung Electronics
Assuming the 90 days trading horizon Scandinavian Tobacco Group is expected to under-perform the Samsung Electronics. But the stock apears to be less risky and, when comparing its historical volatility, Scandinavian Tobacco Group is 1.09 times less risky than Samsung Electronics. The stock trades about -0.01 of its potential returns per unit of risk. The Samsung Electronics Co is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 99,394 in Samsung Electronics Co on August 25, 2024 and sell it today you would lose (13,794) from holding Samsung Electronics Co or give up 13.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Scandinavian Tobacco Group vs. Samsung Electronics Co
Performance |
| Timeline |
| Scandinavian Tobacco |
| Samsung Electronics |
Scandinavian Tobacco and Samsung Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scandinavian Tobacco and Samsung Electronics
The main advantage of trading using opposite Scandinavian Tobacco and Samsung Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scandinavian Tobacco 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.| Scandinavian Tobacco vs. Samsung Electronics Co | Scandinavian Tobacco vs. Samsung Electronics Co | Scandinavian Tobacco vs. Hyundai Motor | Scandinavian Tobacco vs. Toyota Motor Corp |
| Samsung Electronics vs. Toyota Motor Corp | Samsung Electronics vs. SoftBank Group Corp | Samsung Electronics vs. OTP Bank Nyrt | Samsung Electronics vs. Las Vegas Sands |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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