Correlation Between HK Electric and Samsung SDI
Can any of the company-specific risk be diversified away by investing in both HK Electric 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 HK Electric and Samsung SDI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HK Electric Investments and Samsung SDI Co, you can compare the effects of market volatilities on HK Electric 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 HK Electric with a short position of Samsung SDI. Check out your portfolio center. Please also check ongoing floating volatility patterns of HK Electric and Samsung SDI.
Diversification Opportunities for HK Electric and Samsung SDI
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between HKT and Samsung is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding HK Electric Investments and Samsung SDI Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung SDI and HK Electric 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 HK Electric Investments 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 HK Electric i.e., HK Electric and Samsung SDI go up and down completely randomly.
Pair Corralation between HK Electric and Samsung SDI
Assuming the 90 days trading horizon HK Electric Investments is expected to generate 1.02 times more return on investment than Samsung SDI. However, HK Electric is 1.02 times more volatile than Samsung SDI Co. It trades about 0.11 of its potential returns per unit of risk. Samsung SDI Co is currently generating about -0.07 per unit of risk. If you would invest 29.00 in HK Electric Investments on September 14, 2024 and sell it today you would earn a total of 34.00 from holding HK Electric Investments or generate 117.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HK Electric Investments vs. Samsung SDI Co
Performance |
| Timeline |
| HK Electric Investments |
| Samsung SDI |
HK Electric and Samsung SDI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with HK Electric and Samsung SDI
The main advantage of trading using opposite HK Electric and Samsung SDI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HK Electric 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.| HK Electric vs. Apple Inc | HK Electric vs. Apple Inc | HK Electric vs. Apple Inc | HK Electric vs. Apple Inc |
| Samsung SDI vs. MEDICAL FACILITIES NEW | Samsung SDI vs. Flowers Foods | Samsung SDI vs. Algonquin Power Utilities | Samsung SDI vs. Lifeway Foods |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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