Correlation Between Assems and Samsung Electronics
Can any of the company-specific risk be diversified away by investing in both Assems 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 Assems and Samsung Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Assems Inc and Samsung Electronics Co, you can compare the effects of market volatilities on Assems 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 Assems with a short position of Samsung Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Assems and Samsung Electronics.
Diversification Opportunities for Assems and Samsung Electronics
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Assems and Samsung is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Assems Inc and Samsung Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung Electronics and Assems 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 Assems Inc 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 Assems i.e., Assems and Samsung Electronics go up and down completely randomly.
Pair Corralation between Assems and Samsung Electronics
Assuming the 90 days trading horizon Assems Inc is expected to under-perform the Samsung Electronics. But the stock apears to be less risky and, when comparing its historical volatility, Assems Inc is 1.68 times less risky than Samsung Electronics. The stock trades about -0.44 of its potential returns per unit of risk. The Samsung Electronics Co is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 4,865,000 in Samsung Electronics Co on August 31, 2024 and sell it today you would lose (90,000) from holding Samsung Electronics Co or give up 1.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Assems Inc vs. Samsung Electronics Co
Performance |
| Timeline |
| Assems Inc |
| Samsung Electronics |
Assems and Samsung Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Assems and Samsung Electronics
The main advantage of trading using opposite Assems and Samsung Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Assems 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.| Assems vs. Dongbu Steel Co | Assems vs. BooKook Steel Co | Assems vs. SK Telecom Co | Assems vs. Dong A Steel Technology |
| Samsung Electronics vs. LG Corp | Samsung Electronics vs. Busan Industrial Co | Samsung Electronics vs. Busan Ind | Samsung Electronics vs. Mirae Asset Daewoo |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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