Correlation Between World Chess and Samsung Electronics
Can any of the company-specific risk be diversified away by investing in both World Chess 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 World Chess and Samsung Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between World Chess PLC and Samsung Electronics Co, you can compare the effects of market volatilities on World Chess 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 World Chess with a short position of Samsung Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of World Chess and Samsung Electronics.
Diversification Opportunities for World Chess and Samsung Electronics
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between World and Samsung is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding World Chess PLC and Samsung Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung Electronics and World Chess 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 World Chess PLC 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 World Chess i.e., World Chess and Samsung Electronics go up and down completely randomly.
Pair Corralation between World Chess and Samsung Electronics
Assuming the 90 days trading horizon World Chess PLC is expected to generate 4.98 times more return on investment than Samsung Electronics. However, World Chess is 4.98 times more volatile than Samsung Electronics Co. It trades about 0.06 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 350.00 in World Chess PLC on September 1, 2024 and sell it today you would earn a total of 25.00 from holding World Chess PLC or generate 7.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.23% |
| Values | Daily Returns |
World Chess PLC vs. Samsung Electronics Co
Performance |
| Timeline |
| World Chess PLC |
| Samsung Electronics |
World Chess and Samsung Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with World Chess and Samsung Electronics
The main advantage of trading using opposite World Chess and Samsung Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if World Chess 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.| World Chess vs. SupplyMe Capital PLC | World Chess vs. Lloyds Banking Group | World Chess vs. Premier African Minerals | World Chess vs. SANTANDER UK 8 |
| Samsung Electronics vs. Roebuck Food Group | Samsung Electronics vs. Molson Coors Beverage | Samsung Electronics vs. United Utilities Group | Samsung Electronics vs. Premier Foods PLC |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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