Correlation Between ABOV Semiconductor and Samsung Electronics
Can any of the company-specific risk be diversified away by investing in both ABOV Semiconductor 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 ABOV Semiconductor and Samsung Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ABOV Semiconductor Co and Samsung Electronics Co, you can compare the effects of market volatilities on ABOV Semiconductor 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 ABOV Semiconductor with a short position of Samsung Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of ABOV Semiconductor and Samsung Electronics.
Diversification Opportunities for ABOV Semiconductor and Samsung Electronics
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ABOV and Samsung is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding ABOV Semiconductor 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 ABOV Semiconductor 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 ABOV Semiconductor 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 ABOV Semiconductor i.e., ABOV Semiconductor and Samsung Electronics go up and down completely randomly.
Pair Corralation between ABOV Semiconductor and Samsung Electronics
Assuming the 90 days trading horizon ABOV Semiconductor Co is expected to generate 2.46 times more return on investment than Samsung Electronics. However, ABOV Semiconductor is 2.46 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 0.0 per unit of risk. If you would invest 915,627 in ABOV Semiconductor Co on October 13, 2024 and sell it today you would lose (58,627) from holding ABOV Semiconductor Co or give up 6.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ABOV Semiconductor Co vs. Samsung Electronics Co
Performance |
| Timeline |
| ABOV Semiconductor |
| Samsung Electronics |
ABOV Semiconductor and Samsung Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ABOV Semiconductor and Samsung Electronics
The main advantage of trading using opposite ABOV Semiconductor and Samsung Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ABOV Semiconductor 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.| ABOV Semiconductor vs. Innowireless Co | ABOV Semiconductor vs. Seoyon Topmetal Co | ABOV Semiconductor vs. Mirai Semiconductors Co | ABOV Semiconductor vs. Drb Industrial |
| Samsung Electronics vs. Cloud Air CoLtd | Samsung Electronics vs. Wireless Power Amplifier | Samsung Electronics vs. Polaris Office Corp | Samsung Electronics vs. Korea Air Svc |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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