Correlation Between Universal Music and Samsung Electronics
Can any of the company-specific risk be diversified away by investing in both Universal Music 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 Universal Music and Samsung Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Universal Music Group and Samsung Electronics Co, you can compare the effects of market volatilities on Universal Music 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 Universal Music with a short position of Samsung Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Universal Music and Samsung Electronics.
Diversification Opportunities for Universal Music and Samsung Electronics
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Universal and Samsung is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Universal Music 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 Universal Music 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 Universal Music 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 Universal Music i.e., Universal Music and Samsung Electronics go up and down completely randomly.
Pair Corralation between Universal Music and Samsung Electronics
Assuming the 90 days trading horizon Universal Music Group is expected to generate 1.45 times more return on investment than Samsung Electronics. However, Universal Music is 1.45 times more volatile than Samsung Electronics Co. It trades about -0.02 of its potential returns per unit of risk. Samsung Electronics Co is currently generating about -0.12 per unit of risk. If you would invest 2,812 in Universal Music Group on September 15, 2024 and sell it today you would lose (366.00) from holding Universal Music Group or give up 13.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.23% |
| Values | Daily Returns |
Universal Music Group vs. Samsung Electronics Co
Performance |
| Timeline |
| Universal Music Group |
| Samsung Electronics |
Universal Music and Samsung Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Universal Music and Samsung Electronics
The main advantage of trading using opposite Universal Music and Samsung Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Universal Music 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.| Universal Music vs. Samsung Electronics Co | Universal Music vs. Samsung Electronics Co | Universal Music vs. Hyundai Motor | Universal Music vs. Reliance Industries Ltd |
| Samsung Electronics vs. Zegona Communications Plc | Samsung Electronics vs. Universal Health Services | Samsung Electronics vs. Omega Healthcare Investors | Samsung Electronics vs. Orient Telecoms |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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