Correlation Between STMICROELECTRONICS and Samsung Electronics
Can any of the company-specific risk be diversified away by investing in both STMICROELECTRONICS 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 STMICROELECTRONICS and Samsung Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STMICROELECTRONICS and Samsung Electronics Co, you can compare the effects of market volatilities on STMICROELECTRONICS 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 STMICROELECTRONICS with a short position of Samsung Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of STMICROELECTRONICS and Samsung Electronics.
Diversification Opportunities for STMICROELECTRONICS and Samsung Electronics
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between STMICROELECTRONICS and Samsung is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding STMICROELECTRONICS and Samsung Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samsung Electronics and STMICROELECTRONICS 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 STMICROELECTRONICS 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 STMICROELECTRONICS i.e., STMICROELECTRONICS and Samsung Electronics go up and down completely randomly.
Pair Corralation between STMICROELECTRONICS and Samsung Electronics
Assuming the 90 days trading horizon STMICROELECTRONICS is expected to under-perform the Samsung Electronics. In addition to that, STMICROELECTRONICS is 1.19 times more volatile than Samsung Electronics Co. It trades about -0.03 of its total potential returns per unit of risk. Samsung Electronics Co is currently generating about -0.02 per unit of volatility. If you would invest 99,849 in Samsung Electronics Co on October 11, 2024 and sell it today you would lose (22,849) from holding Samsung Electronics Co or give up 22.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
STMICROELECTRONICS vs. Samsung Electronics Co
Performance |
| Timeline |
| STMICROELECTRONICS |
| Samsung Electronics |
STMICROELECTRONICS and Samsung Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STMICROELECTRONICS and Samsung Electronics
The main advantage of trading using opposite STMICROELECTRONICS and Samsung Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STMICROELECTRONICS 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.| STMICROELECTRONICS vs. Wyndham Hotels Resorts | STMICROELECTRONICS vs. Choice Hotels International | STMICROELECTRONICS vs. Summit Hotel Properties | STMICROELECTRONICS vs. Webster Financial |
| Samsung Electronics vs. Samsung Electronics Co | Samsung Electronics vs. Microsoft | Samsung Electronics vs. Tencent Holdings |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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