Correlation Between Samsung Electronics and Charter Communications
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics and Charter Communications 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 Samsung Electronics and Charter Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Samsung Electronics Co and Charter Communications Cl, you can compare the effects of market volatilities on Samsung Electronics and Charter Communications 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 Samsung Electronics with a short position of Charter Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Charter Communications.
Diversification Opportunities for Samsung Electronics and Charter Communications
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Samsung and Charter is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Charter Communications Cl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charter Communications and Samsung Electronics 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 Samsung Electronics Co are associated (or correlated) with Charter Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Charter Communications has no effect on the direction of Samsung Electronics i.e., Samsung Electronics and Charter Communications go up and down completely randomly.
Pair Corralation between Samsung Electronics and Charter Communications
Assuming the 90 days trading horizon Samsung Electronics Co is expected to generate 0.75 times more return on investment than Charter Communications. However, Samsung Electronics Co is 1.33 times less risky than Charter Communications. It trades about -0.11 of its potential returns per unit of risk. Charter Communications Cl is currently generating about -0.19 per unit of risk. If you would invest 81,500 in Samsung Electronics Co on November 1, 2024 and sell it today you would lose (6,400) from holding Samsung Electronics Co or give up 7.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 97.62% |
| Values | Daily Returns |
Samsung Electronics Co vs. Charter Communications Cl
Performance |
| Timeline |
| Samsung Electronics |
| Charter Communications |
Samsung Electronics and Charter Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Charter Communications
The main advantage of trading using opposite Samsung Electronics and Charter Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics position performs unexpectedly, Charter Communications 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 Charter Communications will offset losses from the drop in Charter Communications' long position.| Samsung Electronics vs. JPMorgan Japanese Investment | Samsung Electronics vs. Bankers Investment Trust | Samsung Electronics vs. Kinnevik Investment AB | Samsung Electronics vs. FC Investment Trust |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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