Correlation Between Compass Group and Samsung Electronics
Can any of the company-specific risk be diversified away by investing in both Compass Group 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 Compass Group and Samsung Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Compass Group PLC and Samsung Electronics Co, you can compare the effects of market volatilities on Compass Group 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 Compass Group with a short position of Samsung Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compass Group and Samsung Electronics.
Diversification Opportunities for Compass Group and Samsung Electronics
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Compass and Samsung is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Compass Group 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 Compass Group 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 Compass Group 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 Compass Group i.e., Compass Group and Samsung Electronics go up and down completely randomly.
Pair Corralation between Compass Group and Samsung Electronics
Assuming the 90 days trading horizon Compass Group PLC is expected to generate 0.44 times more return on investment than Samsung Electronics. However, Compass Group PLC is 2.28 times less risky than Samsung Electronics. It trades about 0.1 of its potential returns per unit of risk. Samsung Electronics Co is currently generating about -0.09 per unit of risk. If you would invest 258,365 in Compass Group PLC on October 19, 2024 and sell it today you would earn a total of 9,135 from holding Compass Group PLC or generate 3.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Compass Group PLC vs. Samsung Electronics Co
Performance |
| Timeline |
| Compass Group PLC |
| Samsung Electronics |
Compass Group and Samsung Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Compass Group and Samsung Electronics
The main advantage of trading using opposite Compass Group and Samsung Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Compass Group 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.| Compass Group vs. Solstad Offshore ASA | Compass Group vs. American Homes 4 | Compass Group vs. Fortune Brands Home | Compass Group vs. Air Products Chemicals |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
Other Complementary Tools
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance |