Correlation Between Merit Group and Samsung Electronics
Can any of the company-specific risk be diversified away by investing in both Merit 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 Merit 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 Merit Group PLC and Samsung Electronics Co, you can compare the effects of market volatilities on Merit 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 Merit Group with a short position of Samsung Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Merit Group and Samsung Electronics.
Diversification Opportunities for Merit Group and Samsung Electronics
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Merit and Samsung is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Merit 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 Merit 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 Merit 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 Merit Group i.e., Merit Group and Samsung Electronics go up and down completely randomly.
Pair Corralation between Merit Group and Samsung Electronics
Assuming the 90 days trading horizon Merit Group PLC is expected to under-perform the Samsung Electronics. In addition to that, Merit Group is 2.32 times more volatile than Samsung Electronics Co. It trades about -0.19 of its total potential returns per unit of risk. Samsung Electronics Co is currently generating about -0.18 per unit of volatility. If you would invest 114,185 in Samsung Electronics Co on August 28, 2024 and sell it today you would lose (25,985) from holding Samsung Electronics Co or give up 22.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 98.46% |
| Values | Daily Returns |
Merit Group PLC vs. Samsung Electronics Co
Performance |
| Timeline |
| Merit Group PLC |
| Samsung Electronics |
Merit Group and Samsung Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Merit Group and Samsung Electronics
The main advantage of trading using opposite Merit Group and Samsung Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Merit 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.| Merit Group vs. Samsung Electronics Co | Merit Group vs. Samsung Electronics Co | Merit Group vs. Toyota Motor Corp | Merit Group vs. Reliance Industries Ltd |
| Samsung Electronics vs. Toyota Motor Corp | Samsung Electronics vs. SoftBank Group Corp | Samsung Electronics vs. OTP Bank Nyrt | Samsung Electronics vs. Las Vegas Sands |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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