Correlation Between Hugel and Samsung Electronics
Can any of the company-specific risk be diversified away by investing in both Hugel 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 Hugel and Samsung Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hugel Inc and Samsung Electronics Co, you can compare the effects of market volatilities on Hugel 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 Hugel with a short position of Samsung Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hugel and Samsung Electronics.
Diversification Opportunities for Hugel and Samsung Electronics
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hugel and Samsung is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Hugel 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 Hugel 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 Hugel 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 Hugel i.e., Hugel and Samsung Electronics go up and down completely randomly.
Pair Corralation between Hugel and Samsung Electronics
Assuming the 90 days trading horizon Hugel Inc is expected to generate 2.19 times more return on investment than Samsung Electronics. However, Hugel is 2.19 times more volatile than Samsung Electronics Co. It trades about 0.4 of its potential returns per unit of risk. Samsung Electronics Co is currently generating about 0.1 per unit of risk. If you would invest 24,100,000 in Hugel Inc on December 6, 2024 and sell it today you would earn a total of 7,450,000 from holding Hugel Inc or generate 30.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hugel Inc vs. Samsung Electronics Co
Performance |
| Timeline |
| Hugel Inc |
| Samsung Electronics |
Hugel and Samsung Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hugel and Samsung Electronics
The main advantage of trading using opposite Hugel and Samsung Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hugel 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.The idea behind Hugel Inc and Samsung Electronics Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Samsung Electronics vs. INSUN Environmental New | Samsung Electronics vs. Dongkuk Steel Mill | Samsung Electronics vs. Pureun Mutual Savings | Samsung Electronics vs. Incar Financial Service |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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