Correlation Between STHREE PLC and Samsung Electronics
Can any of the company-specific risk be diversified away by investing in both STHREE PLC 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 STHREE PLC and Samsung Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STHREE PLC LS and Samsung Electronics Co, you can compare the effects of market volatilities on STHREE PLC 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 STHREE PLC with a short position of Samsung Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of STHREE PLC and Samsung Electronics.
Diversification Opportunities for STHREE PLC and Samsung Electronics
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between STHREE and Samsung is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding STHREE PLC LS and Samsung Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung Electronics and STHREE PLC 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 STHREE PLC LS 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 STHREE PLC i.e., STHREE PLC and Samsung Electronics go up and down completely randomly.
Pair Corralation between STHREE PLC and Samsung Electronics
Assuming the 90 days horizon STHREE PLC is expected to generate 11.03 times less return on investment than Samsung Electronics. But when comparing it to its historical volatility, STHREE PLC LS is 1.77 times less risky than Samsung Electronics. It trades about 0.0 of its potential returns per unit of risk. Samsung Electronics Co is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 81,000 in Samsung Electronics Co on August 30, 2024 and sell it today you would earn a total of 0.00 from holding Samsung Electronics Co or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
STHREE PLC LS vs. Samsung Electronics Co
Performance |
| Timeline |
| STHREE PLC LS |
| Samsung Electronics |
STHREE PLC and Samsung Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STHREE PLC and Samsung Electronics
The main advantage of trading using opposite STHREE PLC and Samsung Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STHREE PLC 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.| STHREE PLC vs. Recruit Holdings Co | STHREE PLC vs. Randstad NV | STHREE PLC vs. TRINET GROUP INC | STHREE PLC vs. TONGDAO LIEPGR DL 0001 |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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