Correlation Between Auto Trader and Samsung Electronics
Can any of the company-specific risk be diversified away by investing in both Auto Trader 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 Auto Trader and Samsung Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Auto Trader Group and Samsung Electronics Co, you can compare the effects of market volatilities on Auto Trader 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 Auto Trader with a short position of Samsung Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Auto Trader and Samsung Electronics.
Diversification Opportunities for Auto Trader and Samsung Electronics
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Auto and Samsung is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Auto Trader 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 Auto Trader 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 Auto Trader 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 Auto Trader i.e., Auto Trader and Samsung Electronics go up and down completely randomly.
Pair Corralation between Auto Trader and Samsung Electronics
Assuming the 90 days trading horizon Auto Trader Group is expected to generate 0.77 times more return on investment than Samsung Electronics. However, Auto Trader Group is 1.3 times less risky than Samsung Electronics. It trades about 0.05 of its potential returns per unit of risk. Samsung Electronics Co is currently generating about -0.02 per unit of risk. If you would invest 59,200 in Auto Trader Group on November 4, 2024 and sell it today you would earn a total of 19,840 from holding Auto Trader Group or generate 33.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Auto Trader Group vs. Samsung Electronics Co
Performance |
| Timeline |
| Auto Trader Group |
| Samsung Electronics |
Auto Trader and Samsung Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Auto Trader and Samsung Electronics
The main advantage of trading using opposite Auto Trader and Samsung Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Auto Trader 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.| Auto Trader vs. Vienna Insurance Group | Auto Trader vs. Lowland Investment Co | Auto Trader vs. Vietnam Enterprise Investments | Auto Trader vs. EJF Investments |
| Samsung Electronics vs. Metro Bank PLC | Samsung Electronics vs. Regions Financial Corp | Samsung Electronics vs. Zurich Insurance Group | Samsung Electronics vs. Raymond James Financial |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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