Correlation Between China Communications and Samsung SDI
Can any of the company-specific risk be diversified away by investing in both China Communications and Samsung SDI 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 China Communications and Samsung SDI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Communications Services and Samsung SDI Co, you can compare the effects of market volatilities on China Communications and Samsung SDI 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 China Communications with a short position of Samsung SDI. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Communications and Samsung SDI.
Diversification Opportunities for China Communications and Samsung SDI
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between China and Samsung is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding China Communications Services and Samsung SDI Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung SDI and China Communications 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 China Communications Services are associated (or correlated) with Samsung SDI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samsung SDI has no effect on the direction of China Communications i.e., China Communications and Samsung SDI go up and down completely randomly.
Pair Corralation between China Communications and Samsung SDI
Assuming the 90 days horizon China Communications Services is expected to generate 0.44 times more return on investment than Samsung SDI. However, China Communications Services is 2.25 times less risky than Samsung SDI. It trades about -0.06 of its potential returns per unit of risk. Samsung SDI Co is currently generating about -0.11 per unit of risk. If you would invest 54.00 in China Communications Services on November 3, 2024 and sell it today you would lose (1.00) from holding China Communications Services or give up 1.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
China Communications Services vs. Samsung SDI Co
Performance |
| Timeline |
| China Communications |
| Samsung SDI |
China Communications and Samsung SDI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Communications and Samsung SDI
The main advantage of trading using opposite China Communications and Samsung SDI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Communications position performs unexpectedly, Samsung SDI 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 SDI will offset losses from the drop in Samsung SDI's long position.| China Communications vs. T Mobile | China Communications vs. China Mobile Limited | China Communications vs. Verizon Communications | China Communications vs. ATT Inc |
| Samsung SDI vs. AIR LIQUIDE ADR | Samsung SDI vs. SQUIRREL MEDIA SA | Samsung SDI vs. Tencent Music Entertainment | Samsung SDI vs. Townsquare Media |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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